Were a motor-vehicle floorplan security agreement and vehicle advices subject to Florida documentary stamp tax when no document promised a sum certain?

Plain-English summary

The wholesale floorplan agreement and vehicle advices were not subject to documentary stamp tax, either separately or together, as long as the agreement was not filed or recorded in Florida. None of the documents contained a borrower-signed promise to pay a sum certain.

The agreement authorized the lender to make discretionary advances and required repayment of each advance, but it stated no specific dollar amount. Each vehicle advice identified vehicles and invoice amounts but contained no promise to pay and did not reference or expressly incorporate the agreement.

Under the 1997 separate-document rule cited by the Department, one document did not determine another's taxability unless expressly incorporated. Because the agreement and advices did not incorporate one another, combining their information did not create a taxable written obligation.

What this means for you

A credit framework plus later borrowing data does not automatically become a taxable sum-certain promise. Express incorporation and filing or recording can materially change the result.

The ruling was conditioned on the security agreement remaining unfiled and unrecorded in Florida. A recorded security agreement has a separate statutory tax rule.

Common questions

Q: Did the floorplan agreement contain a loan limit or principal amount? It contained no specific dollar amount and allowed advances in amounts chosen by the lender.

Q: Did the vehicle advices promise repayment? No. They listed vehicle serial numbers and invoice amounts only.

Q: Could the documents be read together to create a taxable amount? No, because neither expressly incorporated the other under the cited 1997 rule.

Q: What condition did the Department place on the answer? The agreement could not be filed or recorded in Florida.

Citations and references

• Fla. Stat. § 201.08(1) — documentary stamp tax on written obligations and recorded security agreements
• Fla. Admin. Code r. 12B-4.052(6) — tax attaches to the promise to pay
• Chapter 97-123, Laws of Florida — separate document affects taxability only when expressly incorporated
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 97B4-009

Original ruling text

Status: Reference TAA 95(M)-007R, issued December 14, 1995 and
TAA 95(M)-007, issued August 15, 1995

Jul 10, 1997

Re: Technical Assistance Advisement No. 97(B)4-009
Documentary Stamp Tax: Wholesale Floorplan
Section 201.08(1), F.S.
XXX (Agreement)
XXX (Advice)
XXX (Advice)

Dear :

You have petitioned for a Revision of Technical Assistance
Advisement 95(M)-007 pursuant to s. 213.22, F.S., and Rule 1211.003, F.A.C.

Issues

The issue is whether the Wholesale Floorplan Security
Agreement, the Wholesale Floorplan Advice-New Cars, or the
Wholesale Floorplan Advice-Used Cars are subject to the
documentary stamp tax individually or collectively.

Facts

You have enclosed the Agreement, Advice-New Cars and an
Advice-Used Cars for our review to determine the taxability of
each document and the documents collectively.

You provided that lender enters into the Agreement with
motor vehicle dealers (dealer) located in Florida and outside
Florida after issuing a commitment letter setting the maximum
loan limits and terms of the loan. The Agreement does not
contain a specific dollar amount. For a Florida dealer, the
Agreement is executed by both the dealer and the lender. For a
non-Florida dealer, the Agreement is executed by the dealer out
of Florida and in Florida by the lender. The Agreement neither

attaches nor references a separate promissory note nor does the
dealer sign a promissory note. The Agreement specifically
provides in part:

LENDER may from time to time make payments to manufacturers
... on behalf of DEALER, make loans and advances to,
purchase from or otherwise acquire retail installment sales
contracts, conditional sales contracts, closed end lease
agreements or other security instruments from DEALER, and
otherwise extend credit to or do business with DEALER
(hereinafter called an Advance' and collectively called (Advances'), as requested by or on the behalf of DEALER in
manual advices, drafts, electronic funds transfer requests
or otherwise, together with supporting documentation
(collectively, `Advance Request'), in such amounts as
LENDER may determine in its sole discretion. All the
provisions of this Agreement shall apply to the total line
of credit including any and all increases.

The Agreement also provides that the DEALER will repay to
the LENDER as follows:

DEALER agrees to pay LENDER the principal amount of each
advance... together with interest thereon on the soonest
of... demand... or... Default and termination of this
Agreement. DEALER further agrees to make all other payments
of principal, interest and all amounts as required herein.

The lender notifies the DEALER in writing of the interest
rate that will be charged under the Agreement. The rate
information is acknowledged as received by the DEALER but does
not contain any dollar amount. As vehicles are acquired by the
DEALER, the DEALER advises the LENDER of the acquisition of
vehicles through the Advice which is either faxed or mailed to
the Lender. The Advice identifies the vehicles that are subject
to the Agreement. The Advice does not reference the Agreement
nor contain a promise to pay.

The Advice is signed by the dealer or his agent and
contains vehicle serial numbers and the invoice amounts for the
vehicles subject to the security agreement.

Taxpayer Analysis

Your position is that neither the execution nor delivery of
the Agreement and the Advice by both the Florida and non-Florida
dealers subjects the Agreement, Advice or the documents to the
documentary stamp tax. Further, the documents are not subject
to tax based on the fact that none of the documents collectively
or separately contain a promise to pay a determinable amount of
money.

Law and Analysis

Section 201.08(1), F.S., provides in pertinent part:

On promissory notes, nonnegotiable notes, written
obligations to pay money, or assignments of salaries,
wages, or other compensation 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. On mortgages, trust deeds, security
agreements, or other evidences of indebtedness filed or
recorded in this 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.

A taxable note or written obligation is one that contains a
written promise to pay a sum certain in money signed by the
borrow.

Rule 12B-4.052(6), F.A.C., provides that the tax is an
excise tax on the promise to pay and that the terms and
certainty of payment are not material.

Chapter 97-123, L.O.F., effective July 1, 1997, states that
taxability of a document is not determined by a separate
document unless the separate document is expressly incorporated
into the document in question.

Department's Position

The Agreement submitted does not contain a written promise
to pay a sum certain in money signed by the borrower. Neither
do the Advices. Neither document expressly incorporates the
other. Thus, it is the opinion of the Department that, if the
Agreement is not filed or recorded in this state, the Agreement
and the Advices, separately or together, are not taxable under
s. 201.08(1), 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 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,

James E. Silvey
Tax Law Specialist
Tax Policy and Dispute
Resolution
Office of the General Counsel

Jes/