Did Florida documentary stamp tax apply to card and noncard purchases under a revolving charge agreement?

Subject

Documentary Stamp Tax on Revolving Charge Sales

Plain-English summary

The submitted revolving-charge documents were not subject to Florida documentary stamp tax. Purchases effected with credit, charge, or debit cards were expressly excluded from the tax by the statute cited in the ruling.

The answer was also no for purchases charged to account numbers without cards, because the sales slip did not itself contain an unconditional written promise to pay a sum certain signed by the customer. Tax could apply if the slip contained that promise or expressly incorporated a separate document that did.

Under the 1997 face-of-document rule, taxability was determined from the document itself and any separate document expressly incorporated into it. Other papers in the same contract or obligation did not count unless they were expressly incorporated. Multiple documents evidencing the same primary debt were taxed no more than once on the total indebtedness.

What this means for you

The label "revolving charge agreement" did not decide the tax result. The operative question was what the signed sales slip and expressly incorporated documents actually said.

A receipt that merely acknowledges delivery is different from a signed, unconditional promise to pay a fixed amount. Businesses should review incorporation clauses as well as the face of each transaction document.

Common questions

Q: Were card-based purchases subject to documentary stamp tax? No. The quoted statute excluded receipts, charge slips, and other recorded transactions effected with credit, charge, or debit cards.

Q: Were account-number purchases without a card automatically taxable? No. They remained untaxed if the sales slip lacked a signed, unconditional obligation to pay a sum certain and did not expressly incorporate one.

Q: Could another contract make the slip taxable? Only if the separate document containing the obligation was expressly incorporated into the slip, or the slip was expressly incorporated into that document.

Q: Did the 1997 rule affect older uncollected tax? The ruling said the legislation relieved tax imposed before July 1, 1997, but not actually collected, when the documents were exempted or otherwise not taxable under new section 201.08(6).

Q: Can another creditor rely on this ruling? No. The advisement binds the Department only for the requester and the specific documents reviewed.

Citations and references

• Fla. Stat. § 201.08(1), (2)(b), (6) — written obligations, card transactions, and the face-of-document rule
• Ch. 97-123, Laws of Florida — 1997 amendment and relief for certain previously uncollected tax
• Fla. Admin. Code r. 12B-4.053 — revolving charge accounts
• Fla. Admin. Code r. 12B-4.054(12) — contingent agreements and sales slips without a promise to pay
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 98B4-002

Original ruling text

Mar 09, 1998

Re: Technical Assistance Advisement No. 98(B)4-002
Documentary Stamp Tax - Revolving Charge Agreement
Section 201.08, F.S.; Rules 12B-4.053(20) and
12B-4.054(12), F.A.C.
XXX (hereinafter "taxpayer")
XXX (hereinafter "revolving charge agreement")

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 taxpayer extends credit to its Florida customers. Once
a completed credit application and revolving charge agreement is
approved, the customer is assigned an account number and issued
a card. At the time of purchase, the customer signs a sales
invoice to acknowledge receipt of the product and/or service
purchased. The taxpayer did not issue cards to its new customers
from XXX through XXX and from XXX through XXX; during those
periods of time a new customer was issued an account with a
personal account number which was accessible from any of the
taxpayer's locations.

Request for Advisement

You request advice as to the following:

(1) Are the sales charged to the revolving charge accounts
which issued cards exempt from the documentary stamp tax?
(2) Are sales charged to the revolving charge accounts
which were issued without cards subject to the documentary stamp
tax?

Provisions of the Law

Section 201.08(1), F.S., imposes documentary stamp tax on
written obligations to pay money. The document must contain an
unconditional written obligation to pay a sum certain in money,
signed by the obligor. The written obligation must be made or
delivered in Florida. Pursuant to s. 201.08(2)(b), F.S.,
however, documentary stamp tax will not be imposed on any
receipt, charge slip or other recorded transaction effected with
a credit card, charge card or debit card.

Section 201.08(6), F.S., Ch. 97-123, L.O.F., became
effective July 1, 1997. It provides as follows:

(6) Taxability of a document pursuant to this section shall
be determined solely from the face of the document and any
separate document expressly incorporated into the document.
Taxability of a document pursuant to this section shall not
be determined by reference to any separate document
referenced or forming part of the same contract or
obligation unless the separate document is expressly
incorporated into the document. When multiple documents
evidence, secure, or form any part of the same primary
debt, tax pursuant to this section shall not be imposed
more than once, on the total indebtedness evidenced,
notwithstanding the existence of multiple documents.

Also, paragraph (2) of section 2, Ch. 97-123, L.O.F.,
provides as follows:

No tax imposed by s. 201.08, F.S., before July 1, 1997, and
not actually collected on documents exempted by or
otherwise not subject to tax pursuant to s. 201.08(6),
F.S., as created by this act, shall be due from any person
with respect to such documents.

Thus, persons are not to be assessed on documents executed
and delivered prior to July 1, 1997, if the document is exempt
under new s. 201.08(6), F.S. The legislation, although not
expressly retroactive, has retroactive effect.

Additionally, Rule 12B-4.053(2), F.A.C., also provides that
purchases made under a revolving charge account agreement are
taxable when the sales slips made pursuant to the agreement
contain a written obligation to pay money. However, when the
revolving charge agreement is dependant on the happening of a
contingency before any obligation is created and the sales slip
in itself does not contain a promise to pay, Rule 12B-4.054(12),
F.A.C., provides that no documentary stamp tax is due.

Conclusion

Documentary stamp tax is not imposed on sales effected by
the use of credit, charge or debit cards. Tax will not be
imposed on revolving credit sales not effected by use of a
credit, charge or debit card where the sales slip does not in
itself contain an unconditional written obligation to pay a sum
certain in money, signed by the obligor, unless a separate
document (or documents) evidencing such an obligation is
expressly incorporated into the sales slip, or vice-versa. The
documents which accompanied your request would not be subject to
the documentary stamp tax.

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