Which LoanLiner forms were taxable written obligations or renewals, and which forms were not taxable by themselves?

Plain-English summary

Florida imposed documentary stamp tax when the signed BFL215 credit agreement and VFL065 advance request and security agreement were construed together. The combined documents contained the required promise to pay, sum certain, and borrower signature.

Several forms were not taxable on their own. The application and cosigner notice neither contained the taxable elements nor referred to another document as part of the writing. The addendum lacked a promise and signature. The guaranty was a contingent obligation and did not expressly incorporate another document.

The signed MST053 subsequent-action form was a taxable renewal if documentary stamp tax had not been properly paid on the original agreement. The tax base in that circumstance was the unpaid balance entered on the extension.

What this means for you

Lenders using modular credit documents

Review cross-references across the package. A form missing one element can become part of a taxable obligation when another integrated form supplies it.

Loan operations teams

Keep the signed credit agreement, approved advance amount, and renewal history together. The ruling's result depended on the contents and completion of specific form numbers.

Accountants and tax professionals

Do not treat every related form as taxable. The Department separated standalone nontaxable documents, the integrated taxable agreement, and a conditional renewal.

Common questions

Q: What three elements were required?
A: A promise to pay, a sum certain in money, and the borrower's signature.

Q: Which forms created the taxable original obligation?
A: BFL215 and VFL065, read together.

Q: Was the LoanLiner application taxable by itself?
A: No.

Q: Was the guaranty agreement taxable by itself?
A: No. The ruling treated it as a contingent obligation that did not incorporate another writing.

Q: Was the subsequent-action form taxable?
A: When signed, MST053 was a taxable renewal if original tax had not been properly paid.

Q: What amount was taxed on the renewal?
A: The unpaid balance entered on the form.

Q: Can another lender rely on this TAA?
A: Not automatically. The advisement states that it binds the Department only on the wording, signatures, cross-references, approved amounts, form numbers, and original-tax facts described.

Citations and references

• Fla. Stat. § 201.08(1) — written obligations to pay money and renewals
• Fla. Admin. Code r. 12B-4.052(6) — promise, sum certain, and borrower signature
• Computer Sales International, Inc. v. State, No. 94-402 (Fla. 1st DCA)
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 96B4-012

Original ruling text

Oct 15, 1996

Re: Technical Assistance Advisement No. 96(B)4-012
Documentary Stamp Tax; Taxation of Various Open-End Forms
under s. 201.08, F.S.
XXX (hereinafter Taxpayer)

Dear :

This is in answer to your request for a Technical
Assistance Advisement on the following question:

Are the submitted forms subject to imposition of
documentary stamp taxes:

1. LoanLiner Application (Form AST013 6826LL);
2. LoanLiner Credit Agreement and Insurance Certificate
   (Form BFL215 6826LL);
3. LoanLiner Credit Agreement (Form BFL215 6826LL);
4. LoanLiner Addendum (No Form number);
5. LoanLiner Advance Request and Security Agreement (Form
   VFL065 6826LL);
6. Notice to Cosigner (Form MSG022);
7. LoanLiner Guaranty Agreement (Form GST012 6826LL);
8. LoanLiner Subsequent Action Form (Form MST053 6826LL).

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.

Under s. 201.08, F.S., and Rule 12B-4.052 (6), F.A.C., in
order to be subject to documentary stamp tax, a written
obligation to pay money must contain three elements:

1. A promise to pay,

2. A sum certain in money, and
3. Signature of the borrower.

In Computer Sales International, Inc., v. State of Florida,
No. 94-402 (Fla 1st DCA), the court held that a written
obligation to pay may be contained in several instruments
comprising one contract. If the contract does not contain all
three elements, then no tax is due. The judicially established
rule is that where a writing expressly refers to and
sufficiently describes another writing, the two may be treated
as a single agreement. Moreover, the rule requiring that
writings which evidence a single agreement must be construed
together is not necessarily confined to instruments executed at
the same time by the same parties for the same purpose. Rather,
instruments signed on different days but containing the same
subject matter may, under appropriate circumstances, be regarded
as one contract and interpreted together.

Below we analyze each form followed by our response:

1. LoanLiner Application (Form AST013 6826LL);

Not taxable itself and does not expressly refer to
another document as part of the writing.

2. LoanLiner Credit Agreement and Insurance Certificate
   (Form BFL215 6826LL);

Contains promise to pay but no signature.

"You promise to pay to the credit union all advances
made to you under this plan...." Does expressly refer
to another document as part of the writing.

3. LoanLiner Credit Agreement (Form BFL215 6826LL);

Contains promise to pay and signature.

"You promise to pay to the credit union all advances
made to you under this plan...." Does expressly refer

to another document as part of the writing.

4. LoanLiner Addendum (No Form number);

Does not contain promise to pay nor signature. Does
not refer to another document as part of the writing.

5. LoanLiner Advance Request and Security Agreement (Form
   VFL065 6826LL);

Expressly refers to another document as part of the
writing. "You request the following advance subject
to the terms and conditions of your LoanLiner Credit
Agreement" which contains a written promise to pay.

"The terms of your security agreement are contained
above. If you are pledging shares for the amount
shown in the security offered section above or if you
agree to make and be bound by the promises in the
security agreement, sign below or sign under the
acknowledgment on the advance proceeds check".

6. Notice to Cosigner (Form MSG022);

Not taxable itself and does not expressly refer to
another document as part of the writing.

7. LoanLiner Guaranty Agreement (Form GST012 6826LL);

Not taxable itself and does not expressly refer to
another document as part of the writing. A guaranty
is a contingent obligation to pay money.

8. LoanLiner Subsequent Action Form (Form MST053 6826LL).

"Extension Agreement" is taxable renewal if the tax is
not properly paid on the original agreement.

"By signing below you agree to amend the terms of your
original agreement and to repay the entire unpaid
balance of $XX."

Department's Position

Documentary stamp tax is due upon completion of the
following two LoanLiner forms:

1. Credit Agreement (BFL215)
2. Advance Request Voucher & Security Agreement (VFL065)

Form BFL215 contains a signed unconditional promise to pay
and amounts advanced under the LoanLiner agreement. Form VFL065
contains an approved advance amount.

Applying the Computer Sales decision, since these two forms
are an integral part of the LoanLiner agreement and are not
required by law to be recorded, they must be construed together
for purposes of assessing the documentary stamp tax. When
construed together, the two forms contain the three elements
necessary to subject the agreement to the tax: an unconditional
promise to pay, a sum certain in money, signed by the borrower.

In addition, LoanLiner Subsequent Action Form No. MST053
6826LL (Form No. 8) when signed, is a taxable renewal if the tax
is not properly paid on the original agreement. The tax would
be based upon the amount entered in the "unpaid balance" portion
of the form.

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