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