Did an out-of-state lender's unilateral, unsigned, and unrecorded loan-extension notice mailed to a Florida borrower create documentary stamp tax?

Plain-English summary

The unilateral loan-extension notice did not create Florida documentary stamp tax under the revised ruling.

The lender executed the notice outside Florida and sent it by certified mail to the Florida borrower. The borrower or representative signed only the Postal Service receipt card, not the extension notice, and did not return the notice to the lender. The lender's mailing-verification form was signed only by its own personnel and kept in its files. No extension or memorandum was recorded.

For an originally out-of-state, unrecorded loan, those facts did not bring the unilateral notice within Florida's documentary-stamp tax. For original loan documents on which proper tax had been paid, and for renewals exempt under section 201.09, the notice likewise did not by itself make the loans taxable.

The answer changed if the Florida borrower signed the notification or agreement to accept the modification or extension and returned it to the lender. In that event, documentary stamp tax could apply unless section 201.09 provided an exemption.

What this means for you

A certified-mail receipt was not the same as the borrower's execution of the extension. The ruling focused on who signed the operative document, whether it was returned, and whether any connected document was made, delivered, filed, or recorded in Florida.

Common questions

Q: Did mailing the notice to Florida create tax by itself? A: No. The notice was executed outside Florida, and the borrower did not sign or return it.

Q: Did signing the certified-mail receipt count as signing the extension? A: No. The ruling distinguished the Postal Service receipt card from the operative notification.

Q: What if the borrower signs and returns the extension agreement? A: The loan documents could become taxable unless a renewal exemption applied.

Q: Did prior tax on the original loan matter? A: Yes. One part of the conclusion assumed proper tax had been paid on the original documents or that a renewal qualified under section 201.09.

Citations and references

• Fla. Stat. § 201.08 — documentary stamp tax on written obligations and renewals
• Fla. Stat. § 201.09 — renewal exemption referenced by the ruling
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 96B4-014R

Original ruling text

Status: Supersedes TAA 96B4-014 issued November 13, 1996

            Apr 07, 1997

Re: Technical Assistance Advisement No. 96(B)4-014 Revised Documentary Stamp Tax: Notification of Extension of Loan Maturity Unilateral Renewal Notifications Made Out of State s. 201.08, F.S. XXX (Lender)

Dear :

This is in response to your recent request for a Technical Assistance Advisement in which you ask if the Florida documentary stamp tax imposed by s. 201.08, F.S., is due upon documents which Lender intends to use to extend the term of loans and make other modifications to loan documents.

                 Facts

Loan documents may consist of one or more promissory notes, a loan agreement, a security agreement or mortgage (or similar document evidencing the security interest, if any, granted to Lender) and any other documents evidencing the loan and the borrower's relationship with Lender (collectively, the "loan documents"). A UCC-1 financing statement will be filed (in the case of secured loans) with the Secretary of State of Florida, and all mortgages will be recorded.

Proper documentary stamp tax will have been paid on the promissory notes evidencing loans closed in Florida and will have been paid on the mortgages securing those loans which are mortgage loans. No documentary stamp tax will have been paid on non-mortgage loans closed outside of Florida.

          Proposed Transaction

As the loans mature, Lender will extend the term of the

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loan or negotiate other modifications to the loan documents.

According to our telephone conversation of XXX, Lender sends the unilaterally executed "Notification of Extension of Loan Maturity" by certified mail, return receipt requested. Upon receipt, Borrower (or his representative) signs the U.S. Postal Service card signifying that the mail has been received by or on behalf of the Borrower. The Verification of Mailing form is signed only by Lender's personnel, is filed in the loan office files, and is not mailed to the Borrower.

The borrower will not execute the Notification of Extension of Loan Maturity nor return this document or signed copies thereof to Lender. No Extension or memorandum thereof will be recorded in the public records.

           Requested Ruling

Will the unilateral execution by Lender of the Notification of Extension of Loan Maturity and subsequent mailing of the Notification to the borrower in Florida constitute a "renewal" and potentially subject the loan to tax pursuant to s. 201.08, F.S., if neither the Extension nor memorandum thereof will be recorded in the public records?

          Department's Position

Section 201.08, F.S., imposes documentary stamp tax on documents and renewals that are made, executed, delivered, sold, transferred, or assigned in Florida, or that are recorded in Florida.

If the loan document was originally made, executed, and delivered out-of-state and not recorded or filed in Florida, a unilateral extension notification (from outside the state) which is not signed by the borrower in Florida, not returned to the lender, and not filed, or recorded in Florida is not subject to documentary stamp tax.

Where proper documentary stamp taxes have been paid on the original loan documents, and if any subsequent renewals are

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exempt under s. 201.09, F.S., the unilateral extension notifications (from outside the State) would not, in and of themselves, render the loans subject to tax under s. 201.08, F.S.

If a unilateral document is executed by the lender outside of Florida, whereby the borrower is merely notified that the loan is extended or modified, the document is not returned to the lender by the borrower, and neither that unilateral document nor any other document connected with that unilateral document is made, executed, delivered, sold, transferred, assigned, or recorded within the State of Florida, no documentary stamp tax is imposed.

However, if the Florida borrower signs the notification letter or agreement acknowledging that borrower agrees with the modifications or extensions and returns that document to Lender, documentary stamp tax would apply to the loan documents, unless exempt under s. 201.09, 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 treatment different from that 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.

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     Sincerely,


     M.E. Clemens, C.P.A.
     Senior Tax Specialist
     Tax Policy and Dispute Resolution
     Office of General Counsel

MEC/mh