Which LoanLiner open-end credit forms created a taxable written obligation or renewal under Florida documentary stamp tax?

Plain-English summary

Florida imposed documentary stamp tax when the signed BFL224 credit agreement and VFL065 advance request and security agreement were read together. The first form contained the borrower's signed unconditional promise to pay, while the second supplied the approved advance amount.

A taxable written obligation required three elements: a promise to pay, a sum certain in money, and the borrower's signature. The Department applied Computer Sales International to treat multiple forms as one agreement because they referred to the same LoanLiner transaction and together supplied all three elements.

The signed MST052 subsequent-action form also could be taxable as a renewal if documentary stamp tax had not been properly paid on the original agreement. In that circumstance, the tax base was the unpaid balance entered on the form.

The request listed thirteen forms, but the operative response specifically identified the BFL224/VFL065 combination and the conditional MST052 renewal. This page does not infer additional taxable forms beyond those findings.

What this means for you

Lenders using document packages

Do not review each form in isolation. Separate documents signed or completed at different times can form one taxable obligation when they concern the same transaction and expressly connect to one another.

Loan operations and compliance teams

Track which document contains each required element. A signed promise with no amount may become taxable once an approved advance form supplies the sum certain.

Accountants and tax professionals

Review renewal documents and original tax payment together. The MST052 result depended on a signed renewal form and tax not having been properly paid on the original agreement.

Common questions

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

Q: Which forms supplied those elements here?
A: The BFL224 credit agreement and VFL065 advance request and security agreement, construed together.

Q: Why were separate forms treated as one contract?
A: They were integral parts of the same LoanLiner agreement and collectively contained the taxable elements.

Q: Was the MST052 subsequent-action form taxable?
A: When signed, it was a taxable renewal if tax had not been properly paid on the original agreement.

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

Q: Did the ruling expressly tax every submitted form?
A: No. Its operative response specifically identified the two-form obligation and the conditional subsequent-action renewal.

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, renewal facts, and original-tax treatment 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, 656 So. 2d 1382 (Fla. 1st DCA 1995)
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 96B4-016

Original ruling text

Nov 13, 1996

Re: Technical Assistance Advisement No. 96(B)4-016
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 (Form BFL226 6849LL);
3. LoanLiner Credit Agreement and Insurance Certificate
   (Form BFL224 6826LL);
4. LoanLiner Addendum (Form XXX);
5. LoanLiner Advance Request and Security Agreement (Form
   VFL065 6826LL);
6. LoanLiner Funds Advance (No Form Number);
7. Notice to Cosigner (Form GST012 LL676);
8. LoanLiner Guaranty Agreement (Form GST012 6826LL);
9. LoanLiner Subsequent Action Form (Form MST052 6826LL).
10. Application for Loan (Form 11201);
11. Notice of Lien (Form XXX);
12. Power of Attorney (Form XXX)
13. Notice to Provide Physical Damage Insurance (Form PDI6/93)

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,
656 So.2d 1382 (Fla. 1st DCA 1995), 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.

Department's Position

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

1. Credit Agreement (BFL224)
2. Advance Request Voucher & Security Agreement (VFL065)

Form BFL224 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. MST052
6826LL (Form No. 9) 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