Did storing and ministerially servicing Georgia loan notes in Florida create annual intangible tax or documentary stamp tax?

Plain-English summary

The Georgia notes were not subject to Florida annual intangible tax or documentary stamp tax merely because the Florida bank stored and ministerially serviced them.

The Georgia bank continued to own, manage, and control the loans. The Florida affiliate held the documents for safekeeping, received payments as collecting agent, remitted them to Georgia, maintained payment histories, sent reports, and issued delinquency reminders. It did not underwrite, enforce, or collect the Georgia loans beyond receiving payments.

Those limited activities did not create annual intangible-tax liability for either bank. The Department warned that additional activities could change the result.

The documents were executed and delivered in Georgia and later sent to Florida only for safekeeping, so no event taxable under section 201.08 occurred in Florida. The Department accepted the existing affidavit and the proposed signed closing-statement certification as proof of out-of-state execution and delivery.

What this means for you

Document custody and ministerial servicing did not equal ownership, management, or control here. The ruling also required contemporaneous proof of where future notes were executed and delivered; physical presence in Florida after closing did not by itself create documentary stamp tax.

Common questions

Q: Did storing the notes in Florida create annual intangible tax? A: No, because the Georgia bank retained ownership, management, and control and the Florida services were limited as described.

Q: Which Florida servicing activities were allowed? A: Receiving and remitting payments, maintaining histories, reporting, and sending delinquency reminders.

Q: Could more extensive servicing change the answer? A: Yes. The Department expressly warned that additional activities might subject the receivables to annual intangible tax.

Q: Did bringing the documents into Florida after closing create documentary stamp tax? A: No. They had been executed and delivered in Georgia and were sent to Florida only for safekeeping.

Q: What proof did the Department accept? A: The submitted affidavit for existing loans and the described closing-statement certification for future loans.

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 r. 12B-4.053(35) — proof of out-of-state execution and delivery
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

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

Original ruling text

Status: Revision of TAA 95M-007 issued August 15, 1995

             Dec 14, 1995

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

Dear :

You have petitioned for a Revision of Technical Assistance Advisement 95(M)-007 pursuant to s. 213.22, F.S., and Rule 12- 11.003, F.A.C.

                 Issue 1

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

                 Facts

Your client, Florida 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

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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. The servicing of the loans by the Florida Bank, evidenced by the Georgia Documents, will continue to be administered by the Georgia Bank. The servicing activities to be provided by the Florida Bank will include receiving payments on the loans, acting strictly as the collecting agent, with the payments then being remitted to the Georgia Bank, maintaining payment histories, providing periodic reports to the Georgia Bank, and sending out reminder notices to delinquent borrowers. In no case would the servicing in Florida include underwriting, enforcement, or collection, other than receiving payments for the Georgia Bank, of the Georgia loans which the Florida Bank is warehousing.

Your position is that neither the Florida Bank nor the Georgia Bank would be subject to the annual intangible tax on the Georgia loans being serviced by the Florida Bank.

The annual intangible tax imposed under ss. 199.032, 199.175, and 199.052, F.S., 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. Therefore, the providing of the servicing activities cited above by the Florida Bank will not subject the Florida Bank nor the Georgia Bank to the annual intangible tax imposed under s. 199.032, F.S. on the Georgia notes that are only warehoused in Florida. However, any additional activities may subject the receivables to the Florida annual intangible tax.

Further, 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

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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.

Therefore, the affidavit submitted in your original request will establish that the loans were executed and delivered in Georgia and are not subject to the Florida documentary stamp tax.

On Georgia Documents which are executed in the future and which you now know will be transmitted to Florida for safekeeping, the Georgia Bank is considering incorporating into the closing statement to be signed in connection with each future loan a statement or certification whereby each signatory would certify that the note and related documents were executed and delivered in Georgia.

As to future notes being executed and delivered out-of- state and subsequently brought into Florida for safekeeping, the Department will accept the closing statement or certification described above as acceptable proof under rule 12B-4.053(35), F.A.C.

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

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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
Tax Policy and Dispute Resolution
Office of the General Counsel

Jes/