Did Florida documentary stamp tax apply to the bank's unsecured credit-line forms?

Plain-English summary

Florida did not impose documentary stamp tax on the bank's four unsecured credit-line forms. The application, agreement, approval notice, and access check did not contain an unconditional written promise, signed by the borrower, to pay a fixed sum of money.

Florida determines documentary stamp tax from the face of the document and any document expressly incorporated into it. A promise that is not fixed and absolute when executed is not taxable under the cited rule.

What this means for you

For credit-line documentation, the operative language matters more than the form's label. A document that fixes an unconditional payment obligation or incorporates another document doing so may produce a different result.

Common questions

Q: Did the borrower's signature on the application or access check make the forms taxable? No. A signature alone did not supply the missing unconditional promise to pay a sum certain.

Q: Were secured loans decided? No. The conclusion expressly addressed the submitted forms when used as unsecured lines of credit.

Citations and references

• Fla. Stat. § 201.08(1) and (6) — documentary stamp tax and face-of-document rule
• Fla. Admin. Code r. 12B-4.052(6) — unconditional written obligation to pay a sum certain
• Fla. Admin. Code r. 12B-4.054(5) — obligations not fixed and absolute
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 03B4-001

Original ruling text

SUMMARY

QUESTION: Are any of the submitted bank forms subject to
the imposition of documentary stamp tax under s. 201.08,
F.S.?

ANSWER: Based on Facts Below. No. The submitted forms do
not contain an unconditional written promise to pay a sum
certain when used as unsecured lines of credit. Therefore,
none of them are subject to documentary stamp tax.

Feb 20, 2003

Re: Technical Assistance Advisement No. 03B4-001
Documentary Stamp Tax - Taxation of Various Bank Forms for
Small Business
s. 201.08, F.S.
XXX (hereinafter the Bank)

Dear :

This is in response to your request for a Technical
Assistance Advisement in which you ask us Florida documentary
stamp tax consequences of the execution and delivery of forms
submitted with your letter. The facts for which advice has been
requested are presented below.

Facts Presented by Petitioner

The Bank conducts business in Florida and in multiple other
states through separate business locations in those states. At
present, the Bank also conducts business in Florida under a
trade name. One of the many business activities by the Bank is
the making of loans to small business customers. In an effort
to standardize its documentation process and minimize the
documentation required in order to evidence a loan, the Bank has
created several forms as follows:

1. Small Business Credit Application (the "Application")

2. Agreement
3. Notice of Approval
4. Form of Access Check

The Application and Agreement have been designed to be used
in multiple jurisdictions. It is anticipated that a customer
needing a loan will complete the Application to which will be
attached the Agreement and will submit the same to the Bank for
approval. Upon approval of the Application by the Bank, the
Bank will notify the customer of its approval by sending the
customer a Notice of Approval.

The borrower will obtain the loan funds through one or more
of the following methods:

(1) the use of an "Access Check" furnished to the borrower
for that purpose;
(2) a telephone request;
(3) an internet request, or
(4) from a teller at a branch office of the Bank.

The Application and Access Check are the only documents
which contain the signature of the applicant/borrower.

Requested Ruling by the Petitioner

You seek the Department's confirmation that no Florida
documentary stamp tax should be imposed on the Application, the
Agreement, the Approval Notice or the Access Check if executed
or delivered by the borrower to the Bank in the State of
Florida.

Law and Discussion

Section 201.08(1), F.S., imposes a documentary stamp tax on
promissory notes and written obligations to pay money executed
or delivered in the State of Florida. The document must contain
an unconditional written obligation to pay a sum certain in
money, signed by the obligor. See Rule 12B-4.052(6), F.A.C.

Section 201.08(6), F.S., states that taxability of a
document "shall be determined solely from the face of the
document and any separate document expressly incorporated into
the document."

Under Rule 12B-4.054(5), F.A.C., a written promise to pay
money which is not fixed and absolute at the time of execution
is not subject to documentary stamp tax.

Conclusion

The submitted documents do not contain an unconditional
written promise to pay a sum certain when used as unsecured
lines of credit. Therefore, none of them are subject to
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 interpretation of the
statutes or rules upon which this advise is based may subject
similar future transactions to a different treatment than
expressed in this response.

You are further advised that this response, your request
and related backup documents are public records under Chapter
199, F.S., and are subject to disclosure to the public under the
conditions of s. 213.22, F.S. Confidential information must be
deleted before public disclosure. In an effort to protect
confidentiality, we request you provide the undersigned with an
edited copy of your request for Technical Assistance Advisement,
the backup material and this response, deleting names, addresses
and any other details which might lead to identification of the
taxpayer. Your response should be received by the Department
within 15 days of the date of this letter.

Sincerely,

Baldan E. Sulker
Senior Tax Specialist
Technical Assistance & Dispute Resolution
Office of General Counsel

BES/mh