Did the original TAA impose documentary stamp tax when a credit union's standing credit agreement and later advance request together created an open-end loan?

Subject

Credit Union Forms

Plain-English summary

In the original ruling, the Department imposed documentary stamp tax on each approved Loanliner open-end loan. The tax result came from reading two forms together as one unrecorded loan contract.

The standing Credit Agreement was signed once and kept on file. It contained the borrower's promise to repay all advances but did not need to be resubmitted for each later loan. Each Advance Request Voucher and Security Agreement stated the requested and approved loan amounts and required the borrower's signature, either on the form or by endorsing the advance check.

Together, those documents supplied the three elements the Department considered decisive: a promise to pay, a sum certain, and the borrower's signature. Incorporation by reference allowed the forms to be construed as one contract even though they were separate and not re-executed together for every advance.

The official source begins with a status notice directing readers to revised TAA 97B4-003R. This page explains the original 1997 ruling only.

What this means for you

Under the original analysis, documentary stamp tax could apply to a multi-document loan package even when no single form contained every required term. Standing documents and later advance forms were read together.

The result did not depend on physically resubmitting the stored credit agreement with every advance request. Its continuing incorporation into each new advance was sufficient under the original ruling.

Common questions

Q: Which forms created the taxable obligation? The Loanliner Credit Agreement and the Advance Request Voucher and Security Agreement.

Q: Was the initial application itself the taxable promise to pay? No. The ruling said the application stated the requested amount but contained no promise to pay.

Q: Did every future advance require a new credit agreement? No. The signed agreement remained on file and was used with later advance requests.

Q: Can the original ruling be treated as final? No. The official document expressly directs readers to revised TAA 97B4-003R.

Citations and references

• Fla. Stat. § 201.08 — documentary stamp tax on written obligations to pay money
• Computer Sales International, Inc. v. Department of Revenue, 656 So. 2d 1382 (Fla. 1st DCA 1995) — separate instruments may constitute one contract
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 97B4-003

Original ruling text

Status: See Taa 97B4-003R (Revised) dated January 12, 1998

Mar 13, 1997

Re: Technical Assistance Advisement No. 97(B)4-003 Documentary Stamp Tax; Credit Union Forms Section 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 several forms used by the lending institution.

Proposed Transaction

The forms under consideration are:

1. Loanliner - Application (Form # AST 013 6826LL)
2. Loanliner - Credit Agreement (Form # BFL218 6849LL)
3. Loanliner - Advance Request Voucher and Security
   Agreement (Form # VFL065 6826LL)
4. Loanliner - Credit Agreement and Insurance Certificate
   -Member's Copy (Also: Form # BFL218 6849LL)
5. Loanliner - Addendum (Form # MST103 6826LL) (This is
   the member's copy.)

Requested Ruling

The requester believes the forms submitted do not require imposition of documentary stamp tax under s. 201.08, F.S.

Discussion and Law

These two documents (#1 and #2 below) represent the Loanliner Open-End Plan:

1. The Loanliner - Application (Form # AST 013 6826LL) states the amount of loan requested. It does not contain a promise to pay. It requires the signature of the borrower. This document is retained by the credit union for future use in securing future "Loanliner Open-End Plan" loans.

2. The Loanliner - Credit Agreement (Form # VFL218
   6849LL) states the amount of the loan requested. It contains the promise to repay all advances made to the borrower. It requires the signature of the borrower. It incorporates by reference the "Loanliner Open-End Plan" and the Addendum. This form is not submitted again to request future open-end loans.

This form is submitted originally and each time an open-end loan is requested:

3. The Loanliner - Advance Request Voucher and Security
   Agreement (Form # VFL065 6826LL) states the amount of loan requested and the amount of the loan approved (sum certain) as well as the current payment due. The signature of the borrower is required either on this security agreement or on the back of the advance proceeds check. Endorsement (signature of the borrower) on the back of the check constitutes the borrower's agreement to be bound by the promises made in the security agreement. This form incorporates by reference the Loanliner Credit Agreement.

The following two forms are originally part of the first Loanliner Open-End Plan loan. Thereafter, they are not submitted with future loan requests:

4. The Loanliner - Credit Agreement and Insurance
   Certificate - Member's Copy (Same Form # VFL218 6849LL) is a duplicate of #2 above and has attached the Loanliner Certificate of Insurance. The Certificate of Insurance incorporates by reference the Loanliner Credit Agreement Application and requires the signature of the borrower. This form is retained by the borrower for their records and is not submitted

to the credit union.

5. The Loanliner - Addendum (Form # MST103 6826LL)
   incorporates by reference the Loanliner Credit Agreement and the Loanliner Advance Request Voucher. It contains information for the borrower. It does not require the signature of the borrower or give the amount of the advance. It is retained by the borrower for their records and is not submitted to the credit union.

Initially, when the Loanliner Open-End Plan loan is first applied for, forms #1, #2 #3 and #5 listed above are considered as part of the contract to borrow from the credit union. After the first Loanliner Open-End Plan loan is obtained by the borrower, a new loan may be secured from the credit union by submitting only #3 above, the Loanliner - Advance Request and Security Agreement. The remaining documents, #1, 2, 4 and 5 are not re-submitted. Forms #1 and #2 are kept on file for future use in the Loanliner Plan for that credit union member.

In Computer Sales International, Inc. v. State of Florida, Department of Revenue, 656 So. 2d 1382 (Fla. 1st DCA 1995), the court held that a written obligation to pay may be contained in several instruments which constitute one contract. When a writing refers to and sufficiently describes another instrument, the other instrument is interpreted as part of the writing. Even if executed on different days, the two instruments are construed together as one contract if they contain the same subject matter. It is not necessary that the instrument be executed as the same time by the same parties for the same purpose.

Further, Florida case law, requiring that the terms of separate, unattached documents be specifically incorporated within those of an instrument before the unattached document can be considered part of the same contract for documentary stamp purposes, does not apply when the documents are unrecorded.

In the situation presented, two of the forms are unrecorded instruments that, when construed together, compose the contract with the credit union. They are:

2. Loanliner - Credit Agreement (Form # BFL218 6849LL)

3. Loanliner - Advance Request Voucher and Security
   Agreement (Form # VFL065 6826LL)

They contain the promise to pay, the sum certain for the loan approved and the signature of the borrower. It is not necessary that each form be re-submitted with each loan request. The Credit Agreement (#2) is executed and kept on file for use with (#3) Advance Request Vouchers submitted in the future. In the future, these form the basis for approval of a new loan.

Department's Position

The two unrecorded documents submitted as part of the Loanliner Open-End Loan Plan (Forms #2 and #3 above) contain a promise to pay a sum certain, signed by the borrower.

These documents are construed together as unrecorded documents subject to documentary stamp tax imposed by s. 201.08, F.S., under the reasoning given in the Computer Sales International, Inc. case cited above. Therefore, s. 201.08, F.S., imposes documentary stamp tax on the amount of each loan approved therein.

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.

Sincerely,

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

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