What did the original Florida ruling say about Georgia notes stored in Florida, and why must the revised TAA 95M-007R be reviewed?

Plain-English summary

The original ruling said that merely storing Georgia notes in Florida did not create documentary stamp or annual intangible tax, but the official source directs readers to a later revision.

The Georgia bank owned, managed, and controlled the notes and had executed and received them outside Florida. The Florida bank would hold the documents only for safekeeping. The Department required more than the notes' payable-to-Georgia status as proof and accepted a sworn affidavit from an authorized Georgia bank officer for existing and future notes.

Under those original facts, later Florida custody did not make the notes taxable for documentary stamp purposes, and Florida annual intangible tax did not apply because control remained in Georgia.

Revised TAA 95M-007R addressed additional Florida servicing activities and a future closing certification. It must be reviewed before treating the original response as final.

What this means for you

This page records the original advisement. The revision is the Department's later statement and contains a fuller servicing analysis.

Common questions

Q: Did Florida safekeeping alone create documentary stamp tax? A: No, if the notes were completed outside Florida and adequately documented.

Q: Was an affidavit required?
A: The Department required additional proof and accepted the stated authorized-officer affidavit.

Q: Did Florida annual intangible tax apply? A: No under the original fact that Georgia retained ownership, management, and control.

Q: Is this the final TAA for the transaction? A: No. The source says to see revised TAA 95M-007R.

Citations and references

• Fla. Stat. §§ 199.032, 199.052, 199.175 — annual intangible tax and taxable situs
• Fla. Stat. § 201.08 — documentary stamp tax on written obligations
• Fla. Admin. Code rr. 12B-4.051(1), 12B-4.053(35) — out-of-state notes and proof
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 95M-007

Original ruling text

Status: See 95M-007R (Revised), issued December 14, 1995

Aug 15, 1995

Re: Technical Assistance Advisement No. 95(M)-007 Documentary Stamp Tax; Recurring Intangible Tax; Safekeeping of Out of State Notes in Florida XXX (Florida Bank)

Dear :

You have petitioned for a Technical Assistance Advisement pursuant to s. 213.22, F.S., and Rule 12-11.003, F.A.C.

Issue 1

Whether the affidavit submitted for review will be sufficient to establish that loan documents which were executed and delivered out of state and brought into Florida for safekeeping are not subject to the Florida documentary stamp tax.

Issue 2

Whether the certification described to be set forth in the closing statement will be sufficient to establish the out of state execution and delivery exemption if the loan documents are stored in Florida.

Issue 3

Whether storing the notes in Florida evidencing the loans made executed and delivered out of state, not secured by Florida real property, will subject the notes to the annual intangible tax.

Facts

Your client, Bank, is in a group of banks that consists of

banks in a number of different states. In an effort to streamline and consolidate certain operations, it is proposed that the Bank hold for safekeeping all promissory notes made payable to the Florida Bank as well as all promissory notes made payable to the Georgia Bank. In order to accomplish this, it is proposed that the Georgia Bank transmit to the Florida Bank: (i) all existing promissory notes made payable to the Georgia Bank and related security documents in their possession, together with (ii) all promissory notes which are in the future executed and made payable to the Georgia Bank and the security documents related thereto (collectively, the "Georgia Documents"). These Georgia Documents were or will be executed by borrowers and delivered to the Georgia Bank outside of the State of Florida and evidence or will evidence loans made by the Georgia Bank. It is your understanding from talking to representatives of the Florida Bank that, even though these Georgia Documents will be held for safekeeping by the Florida Bank, the loans evidenced by the Georgia Documents will continue to be administered by the Georgia Bank and the borrowers will continue to make payments upon such loans directly to the Georgia Bank. In other words, the Florida Bank will merely warehouse and hold for safekeeping the Georgia Documents for the Georgia Bank.

The question is whether the Florida Department of Revenue might seek to impose a Florida documentary stamp tax upon these Georgia Documents which were or will be executed and delivered outside of the State of Florida in that they will now be held for safekeeping in Florida.

It is your view that notwithstanding the presence of these Georgia Documents in the State of Florida, the Department of Revenue should not seek to impose Florida documentary stamp tax upon these documents. These Georgia Documents have merely been transmitted to Florida for safekeeping and were not executed or delivered within the State of Florida. No event described in Section 201.08, Florida Statutes, and giving rise to a tax took place in Florida. At the time the existing Georgia Documents were executed, no affidavit of out-of-state execution and delivery was prepared because it was not then anticipated that these promissory notes would come into the State of Florida for safekeeping or otherwise. The regulatory requirement pertaining

to the affidavit of out-of-state execution and delivery set forth in Florida Administrative Code Rule 12B-4.053(35), which became effective October 20, 1994, appears to only apply to Florida lenders and not to other lenders like the Georgia Bank. As a result, it is your view that no affidavit of out-of-state execution or other similar documentation is required in order to avoid liability for Florida documentary stamp taxes upon the Georgia Documents.

If the Department of Revenue views it as necessary, you could obtain from a duly authorized officer of the Georgia Bank an affidavit that lists the promissory notes being transferred and states that these promissory notes were executed and delivered outside of the State of Florida and are being transmitted to Florida for safekeeping. Additionally, on Georgia Documents which are executed in the future and which we now know will be transmitted to Florida for safekeeping, you could obtain an affidavit of out-of-state execution and delivery in connection with each of these closing. Obviously, this would require educating all Georgia Bank loan officers regarding this requirement and also give rise to questions by Georgia borrowers as to why they are signing an affidavit that the loan was not executed in Florida. Both the Georgia Bank and the Florida Bank would prefer not to have to do this but, if the Department of Revenue feels it is necessary in order to avoid liability for documentary stamp taxes on the Georgia Documents, affidavits could be obtained.

Attached to your letter as exhibits are the following forms of affidavit for the Department's consideration:

(a) Attached as Exhibit "A" is the affidavit to be executed by the duly authorized officer of the Georgia Bank pertaining to the existing Georgia Documents; and (b) Attached as Exhibit "B" is the form of affidavit to be used in connection with the execution and delivery of future Georgia Documents in those situations where the borrower and a Florida Bank agent are present together at the signing and delivery of the future Georgia Documents.

You request the Department of Revenue's position on the

following:

1. Would the transmission and safekeeping of the Georgia
   Documents in Florida by the Florida Bank give rise to any liability for Florida documentary stamp taxes upon the Georgia Documents?
2. In order to avoid liability for Florida documentary
   stamp taxes, is it either necessary or helpful to obtain an affidavit signed by a duly authorized officer of the Georgia Bank certifying that the Georgia Documents being transmitted to the Florida Bank which are in existence at this time were executed and delivered outside of the State of Florida and are now being transferred to the State of Florida for safekeeping?
3. In order to avoid liability for Florida documentary
   stamp taxes, is it either necessary or helpful that an affidavit of out-of-state execution and delivery in the form attached hereto as Exhibit "B" be prepared and executed with respect to Georgia Documents which are executed in the future and transferred to the Florida Bank for safekeeping?

The promissory note was or will be made, executed, delivered, and payable out of state. The note is not secured by Florida real property. The notes are or will be brought into Florida for safekeeping only.

Florida Administrative Code Rule 12B-4.051(1), provides that tax is required on a note executed, delivered, sold, transferred or assigned in Florida. Further, mortgages recorded in Florida are taxable based on the amount secured by the mortgage.

Rule 12B-4.053(35), F.A.C., provides guidelines for substantiating the exemption for notes executed and delivered out of state that may be held in Florida or made payable to a Florida lender. The rule also provides that a sworn affidavit made before an out of state notary at the time of the signing and delivery to the lender will provide sufficient proof to establish the exemption. In addition the rule provides that the

Department will accept any other proof that the note was executed and delivered out of Florida.

Since the notes are and will be executed and delivered out of state, the transmission and safekeeping of the Georgia Documents in Florida by the Florida Bank does not and will not make the Georgia Documents taxable for documentary stamp tax. However, the fact that the note is made payable to an out of state bank does not provide sufficient proof that the note was or will be executed and delivered out of state. Therefore, additional proof is and will be required.

As to the existing notes made, executed and delivered outof-state but already in Florida for safekeeping, the Department will accept the sworn affidavit, your Exhibit "A", signed by a duly authorized officer of the Georgia Bank certifying that the Georgia Documents were executed and delivered out of Florida.

As to future notes being executed and delivered out-ofstate and subsequently brought into Florida for safekeeping, the Department will also accept the same affidavit, your Exhibit "A", signed by the officer.

As to the annual intangible tax imposed under s. 199.032, F.S., ss. 199.175, and 199.052, F.S., provide that the annual intangible tax is imposed on personal property owned, managed or controlled by any person domiciled in Florida. To the extent the notes will be owned, managed and controlled in Georgia and merely stored in Florida for safekeeping, the annual intangible tax will not be due.

This response constitutes a Technical Assistance Advisement under s. 213.22, F.S., which is binding on the Department only under the facts and circumstances described in the request for this advice as specified in s. 213.22, F.S. Our response is predicated on those facts and the specific situation summarized above. You are advised that subsequent statutory or administrative rule changes or judicial interpretations of the statutes or rules upon which this advice is based may subject similar future transactions to a different treatment than expressed in this response.

You are further advised that this response and your request are public records under Chapter 119, F.S., which are subject to disclosure to the public under the conditions of s. 213.22, F.S. Your name, address, and any other details which might lead to identification of the taxpayer must be deleted by the Department before disclosure. In an effort to protect the confidentiality of such information, we request you notify the undersigned in writing within 15 days of any deletions you wish made to the request or the response.

Sincerely,

James E. Silvey
Tax Law Specialist
Technical Assistance
Jes/