Did an agreement to purchase existing accounts receivable at a discount create Florida documentary stamp tax liability?

Plain-English summary

The Florida Department of Revenue concluded that the submitted agreement for purchasing existing accounts receivable did not create documentary stamp tax liability.

The taxpayer bought customers' receivables at a discount and then collected those accounts for its own benefit. Section 201.08(1) imposed tax on notes, written obligations to pay money, and assignments of compensation, but the Department said the documentary-stamp statutes and rules did not address a purchase of receivables that was not evidenced by an indebtedness or written obligation to pay money filed or recorded in Florida.

The conclusion was narrow. The standard agreement could use Schedule 1 for additional agreements, but the submitted Schedule 1 listed none. The advisement expressly excluded documents that might later be included there.

What this means for you

Receivables purchasers and factoring businesses

The Department treated this submitted transaction as a purchase of existing receivables rather than a taxable written obligation to pay money.

Contract teams

Additional schedules or side documents can change the analysis. The ruling did not approve documents later added to Schedule 1.

Accountants and tax professionals

Confirm both the legal character of the transaction and whether any indebtedness or written obligation is filed or recorded in Florida. The advisement was based solely on the documents and facts presented.

Common questions

Q: Did the agreement itself trigger documentary stamp tax?
A: No.

Q: Did the ruling cover future Schedule 1 documents?
A: No. It expressly excluded any additional agreements that might later be included in Schedule 1.

Q: What statutory instruments did the ruling identify as taxable?
A: Notes, written obligations to pay money, and assignments of salaries, wages, or other compensation under section 201.08(1).

Citations and references

• Fla. Stat. §§ 201.08(1) and 213.22

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 97B4-001

Original ruling text

Jan 13, 1997

Re: Technical Assistance Advisement No. 97(B)4-001
Documentary Stamp Tax; Accounts Receivable
s. 201.08, F.S.
XXX (Taxpayer)
XXX (Agreement)

Dear :
This is in response to your letter dated November 15, 1996,
requesting a Technical Assistance Advisement on agreements to

purchase existing accounts receivable.

Statement of the Facts

The Taxpayer does business in and outside the state of
Florida. As part of its services, the Taxpayer purchases
existing accounts receivables from its customers at a discount.
The accounts are then collected by the Taxpayer for its own
benefit. A standard Agreement is executed which contains the
provisions and requirements of the purchase. The Agreement may
include Schedule 1, which provides for any additional agreements
between the parties. No additional agreements were listed in

Schedule 1 of the Agreement submitted for review.
Request
You request an advisement stating whether the Agreement for
purchasing accounts receivable is subject to documentary stamp

tax.

Provision of the Law

Section 201.08(1), F.S., imposes tax on notes, written
obligations to pay money, or assignments of salaries, wages or
other compensation at a rate of $.35 per $100 or fraction
thereof. Neither the documentary stamp tax statutes nor rules

reference the purchase of receivables not evidenced by an

indebtedness or written obligation to pay money filed or

recorded in this State.

Conclusion

The submitted Agreement for purchasing accounts receivable
will not give rise to a liability for payment of documentary
stamp tax. This advisement is based solely on the facts
presented for review and excludes documents which could from

time to time be included in Schedule 1.

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,
Celestine Grantham
Senior Tax Specialist
Tax Policy and Dispute Resolution

Office of General Counsel

CG/mh