Does executing a guaranty create additional Florida documentary stamp tax, and is tax due on a mortgage that secures the guaranty?

Plain-English summary

Executing the guaranty did not create additional Florida documentary stamp tax. The guarantor signed no other loan documents, and the guaranty was not secured by real property. The Department cited Department of Revenue v. Sun Bank for the rule that a mere guaranty was not subject to the tax.

The Department also addressed the statutory changes effective July 1, 1997. If documentary stamp tax had already been paid on the primary obligation, a mortgage securing the guaranty would not trigger another tax on a separate obligation.

What this means for you

The ruling distinguishes the guaranty from the primary note or other written obligation to pay money. A standalone guaranty did not add tax merely because it supported the loan.

The mortgage conclusion depended on tax having been paid on the primary obligation. The ruling does not say that every guaranty-related mortgage is tax-free regardless of how the underlying debt was documented or taxed.

Common questions

Q: Was this guaranty secured by Florida real property? No. The stated guaranty was not secured by real property, and the guarantor signed no other documents in connection with the loan.

Q: Did the guaranty itself create documentary stamp tax? No. The Department concluded that execution of a mere guaranty created no additional documentary stamp tax.

Q: What if a mortgage secures the guaranty? For the law effective July 1, 1997, the Department said no additional documentary stamp tax would be imposed on that mortgage if tax had been paid on the primary obligation.

Q: Can another lender rely on this TAA? No. Section 213.22 makes the advisement binding on the Department only for the facts and circumstances described in the request.

Citations and references

• Fla. Stat. § 201.08(1) — tax on notes and written obligations to pay money
• Fla. Stat. § 201.08(5) — modifications that are not renewals, including adding or changing guarantors or security
• Fla. Stat. § 201.08(7) — mortgages securing another taxpayer's obligation or a guaranty
• Fla. Admin. Code r. 12B-4.053(34) — guaranties secured by mortgages
• Department of Revenue v. Sun Bank, 556 So. 2d 1154, 1155 (Fla. 5th DCA 1990) — a mere guaranty was not subject to documentary stamp tax
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 97B4-014

Original ruling text

Nov 26, 1997

Re: Technical Assistance Advisement No. 97(B)4-014 Documentary Stamp Tax - Execution of a Guaranty Section 201.089(1), F.S. XXX (Lender)

Dear :

Your letter requesting a Technical Assistance Advisement has been referred to this office for response. The specific scenario for which advice has been requested is summarized below.

Statement of the Facts

The Lender approves a loan agreement, at which time a Guaranty may also be executed. The Guarantor executes no other documents in connection with the loan. Additionally, the Guaranty is not secured by real property.

Provision of the Law

Section 201.08(1), F.S., provides in 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....

Regarding the taxability of a Guaranty, Rule 12B-4.053(34), F.A.C., provides that a Guaranty is taxable when secured by a mortgage.

The court in Department of Revenue v. Sun Bank, 556 So.2d 1154, 1155 (5 DCA 1990), held that a mere Guaranty was not

subject to the documentary stamp tax.

Section 201.08(7), F.S., effective July 1, 1997, as created by Section 2, Chapter 97-123, L.O.F., provides in part:

A mortgage, trust deed, or security agreement filed or recorded in this state which is given by a taxpayer different than or in addition to the taxpayer obligated upon the primary note, certificate of indebtedness, or obligation, or which is given to secure a guaranty or surety of a primary note, certificate of indebtedness, or obligation, shall for purposes of this section be deemed to evidence and secure the primary note, certificate of indebtedness, or obligation, not a separate obligation, and to the extent that tax is paid on any document evidencing or securing the primary note, certificate of indebtedness, or obligation, such tax shall be paid once....

Section 201.08(5), F.S., effective July 1, 1997, as created by section 2, Chapter 97-123, L.O.F., provides in part:

... Modifications to documents which do not modify the terms of the indebtedness evidenced such as those given or recorded to correct error; modify covenants, conditions, or terms unrelated to the debt; sever a lien into separate liens; provide for additional, substitute, or further security for the indebtedness; consolidate indebtedness or collateral; add, change, or delete guarantors; or which substitute a new mortgagee or payee are not renewal and are not subject to tax pursuant to this section....

Conclusion

The execution of a mere Guaranty does not incur additional documentary stamp tax. Furthermore, effective July 1, 1997, provided the tax has been paid on the primary obligation, documentary stamp tax will not be imposed on a mortgage which secures a Guaranty.

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
Technical Assistance and Dispute Resolution Office of General Counsel

CG/mh