Were a lender's floor-plan, credit-line, and small-business loan forms subject to Florida documentary stamp tax?

Plain-English summary

Florida found that the lender's three sets of loan forms were not subject to documentary stamp tax.

The Department reviewed motor-vehicle floor-plan financing and security documents, lender credit-line documents, and small-business credit-line documents. None was secured by Florida real property.

For a written obligation to be taxable under section 201.08(1), the document itself—or documents it incorporates—had to contain a written promise to pay, a sum certain in money, and the borrower's signature. The submitted forms did not meet all three requirements. Any mortgage later filed or recorded as security for a loan would still be taxable.

What this means for you

• A loan-related form was not taxable merely because it supported a lending relationship.
• The Department applied a three-element, four-corners-or-incorporation test.
• Recorded mortgages were treated separately from the submitted unsecured forms.

Common questions

Q: Were the submitted loan forms taxable?
A: No.

Q: What three elements did the Department require?
A: A written promise to pay, a sum certain in money, and the borrower's signature.

Q: Would a recorded mortgage securing a loan be taxable?
A: Yes.

Citations and references

• Fla. Stat. § 201.08(1) — documentary stamp tax on written obligations and mortgages
• Fla. Stat. § 213.22 — Technical Assistance Advisements
• Fla. Admin. Code r. 12-11.003 — TAA petitions

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 96B4-003

Original ruling text

Apr 01, 1996

Re: Technical Assistance Advisement No. 96(B)4-003
Documentary Stamp Tax; Taxation of Various Loan Documents
XXX (Lender)

Dear :

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

You have also enclosed the following documents for our
determination:

1. Motor Vehicle Floor Plan Financing and Security
   Agreement
2. Lender Creditline Agreement and Lender Creditline
   Account Agreement
3. Small Business Easyline Documents

Background

Lender is a bank holding company whose wholly-owned
subsidiaries include commercial banks. The Lender engages in
numerous lending transaction with its customers pursuant to the
transactions and forms of agreements as listed above. None of
the preceding agreements are secured by Florida real property.

Requested Advisement

Whether or not the listed forms are subject to Florida
documentary stamp tax under s. 201.08(1), F.S.

Discussion and Law

Relevant to your petition, s. 201.08(1), F.S., provides
that for a written obligation to pay money that is made,
executed, delivered, sold, transferred, or assigned in the State

and for each renewal of the same, the tax shall be 35 cents on
each $100 or fraction thereof of the indebtedness or obligation
evidenced thereby.

In order to be taxable under s. 201.08, F.S., a written
obligation to pay money must have the following three elements
within the four corners of the document or must reference other
documents containing these elements:

l. A written promise to pay;

2. A sum certain in money; and
3. The signature of the borrower.

Department's Position

None of the forms submitted for our review meet all three
requirements listed under s. 201.08, F.S., for taxing purposes
and therefore, they would not be subject to documentary stamp
tax. However, any mortgages filed or recorded in the public
records as security for any loans made by Lender to a borrower
would be subject to tax as prescribed in s. 201.08 (1), F.S.

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,

Baldan E. Sulker
Senior Tax Specialist
Tax Policy and Dispute Resolution
Office of General Counsel

BES/mh