Did Florida documentary stamp tax apply to an equipment master lease, supplement, or acceptance certificate executed in Florida?

Plain-English summary

Florida found no documentary stamp tax due on the master equipment lease, supplement, or certificate of acceptance it reviewed, even if the documents were executed in Florida. No individual document contained an unconditional promise to pay a sum certain, and their cross-references did not expressly incorporate them into a taxable combined obligation.

The retailer leased computers and related equipment under a true or operating lease. The master agreement contained general payment duties, default remedies, and other relationship terms, but no equipment description or payment amounts. A separate supplement listed the equipment, cost, location, monthly payments, commencement date, and purchase-option terms. A certificate documented acceptance.

Taxability depended on the face of the document

Section 201.08(1)(a) taxed notes and other written obligations to pay money when executed, signed, or delivered in Florida. The cited rule required the Department to determine taxability from a document's form and face, plus any other documents it expressly incorporated.

For a master lease to be taxable, the document itself—or the document together with expressly incorporated materials—had to contain an unconditional promise to pay a sum certain in money.

Mere reference was not express incorporation

The master agreement said a supplement “shall refer to and incorporate by reference” the master agreement. Florida read that as an instruction about what the later supplement would do, not as the master agreement incorporating the supplement.

The actual supplement reviewed did not expressly incorporate the master lease or acceptance certificate. The acceptance certificate also did not expressly incorporate the other documents.

Because none could be combined through express incorporation, Florida examined each alone. Each lacked a complete unconditional sum-certain obligation, so none was taxable.

Florida execution alone did not create tax

Execution, signature, or delivery in Florida was a necessary jurisdictional fact under the statute, but it was not sufficient. The document still had to evidence the taxable written obligation described by section 201.08.

What this means for you

Equipment lessors and lessees

Map payment terms and incorporation clauses across every master agreement, schedule, supplement, and acceptance certificate. Small drafting differences can change whether documents are read alone or together.

Finance and legal departments

Do not treat “references,” document descriptions, and express incorporation as interchangeable. Florida required operative language making another document part of the instrument being tested.

Accountants and tax professionals

The ruling was document-specific. Confirm where each instrument was executed, signed, or delivered, then determine whether any one instrument or expressly incorporated group contains an unconditional promise to pay a sum certain.

Common questions

Q: Did any one document state the whole payment obligation?
A: No. The master had general duties, while the supplement had payment details, and none alone contained the complete taxable promise.

Q: Could the documents be read together?
A: Not for this test. Florida found no express incorporation connecting them in the required way.

Q: Was mentioning another document enough?
A: No. The cited rule distinguished express incorporation from implication, reference, or description.

Q: Did signing the documents in Florida make them taxable automatically?
A: No. Florida execution mattered only if the document also evidenced an unconditional promise to pay a sum certain.

Citations and references

• Fla. Stat. § 201.08(1)(a) — tax on notes and other written obligations to pay money executed, signed, or delivered in Florida
• Fla. Admin. Code r. 12B-4.052(6)(b) — taxability from the form and face of a document and documents expressly incorporated into it

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 04B4-009

Original ruling text

SUMMARY
QUESTION: Is Florida's documentary stamp tax as imposed under s. 201.08(1)(a), F.S., due on a master lease,
supplement, or certificate of acceptance if either or all are executed in Florida if the master lease document contains
the obligation to pay, default remedies, and other general terms of the lease relationship and the terms of payment are
contained in a supplement document?
ANSWER - Based on Facts Below: Section 201.08(1)(a), F.S., imposes documentary stamp tax on notes and other
written obligations to pay money executed, signed, or delivered in Florida. Taxability of a document is determined from
the form and face of the document. Whether a document is taxable is determined by reference to that document and
any other document or documents expressly incorporated therein. A document does not expressly incorporate
another document by implication or by mere reference and description of the other document. Express incorporation
occurs when words in a document under examination provide that another document or documents are incorporated
into the document under examination. The documentary stamp tax is due on a master lease agreement if the
agreement is executed, signed, or delivered in Florida and if the master lease agreement contains within itself, or
within itself and all other documents expressly incorporated within, an unconditional promise to pay a sum certain in
money.
A review of the documents (master lease, supplement, and certificate of acceptance) results in a determination that,
when read alone, none contains an unconditional obligation to pay a sum certain in money. Therefore, neither of the
documents alone is subject to the documentary stamp tax. It is also determined that the language of the master lease
does not expressly incorporate the supplement, but only provides that the supplement will refer to and incorporate by
reference the master lease. However, a review of the supplement resulted in no finding of express incorporation of the
master lease or the certificate of acceptance. It is also determined that the certificate of acceptance does not
expressly incorporate the master lease or the supplement. Therefore, since there is no express incorporation, neither
document can be read in combination with any other document to determine if there is an unconditional obligation to
pay a sum certain in money. No documentary stamp tax, as imposed under s. 201.08(1)(a), F.S., is due on the
documents reviewed, even if they are executed in Florida.

July 21, 2004

Re: Technical Assistance Advisement No. 04B4-009
Documentary Stamp Tax - Equipment Lease
Section 201.08(1)(a), F.S.
XXX ("Taxpayer")
XXX ("Corporation")

Dear :

This is in response to your letter dated April 1, 2004, requesting a Technical Assistance Advisement regarding
application of Florida's documentary stamp tax as imposed under s. 201.08(1)(a), F.S., upon a master lease
agreement executed in Florida where Taxpayer is lessee.
Facts as Presented by Petitioner
Taxpayer is incorporated in Delaware with its principal place of business in Florida. Taxpayer is in the business of
retail sales of office supplies and equipment. Taxpayer leases computers and related equipment from Corporation in
the ordinary course of business. The character of the lease for federal tax and accounting purposes is a true or
operating lease.
Taxpayer entered into a Term Lease Master Agreement ("Master Lease") with Corporation in 1995. The Master
Lease includes three addendums added between 1995 and 1997, and one amendment added in 2000. The Master
Lease contains the obligations to pay, default remedies, and other general terms of the lease relationship. The Master
Lease does not contain a description of the equipment, or any of the terms of payment. These terms are contained on
a second document, the Term Lease Supplement ("Supplement"), which contains a specific description of the property
leased, cost, location, monthly payment terms, commencement of payments, and terms of any purchase option. The
Master Lease specifically incorporates the terms of the Supplement by reference.
The Master Lease states that the Lessee’s obligation to pay shall begin on the Rent Commencement Date.
Pursuant to the Amendment to Master Lease, the Rent Commencement Date is defined as the first day of the first full
payment period, as specified on the Supplement, following the date the equipment is accepted by the Lessee.
The equipment is accepted by the execution of a third document, the Certificate of Acceptance. The Certificate of
Acceptance references the Master Lease, but it is not incorporated into the Master Lease, nor does it incorporate the
Master Lease by reference.
Request for Advisement
1.) Is Florida documentary stamp tax due and payable upon the Master Lease, the Supplement, or the Certificate of
Acceptance if the foregoing are executed in Florida?
2.) If the Master Lease is executed outside of Florida but the Supplement and Certificate of Acceptance are executed
in Florida, is Florida documentary stamp tax due and payable?
3.) If the answer to either question 1 or question 2 is yes, what is the amount upon which Florida documentary stamp
tax is calculated?
Law and Discussion
Section 201.08(1)(a), F.S., imposes documentary stamp tax on notes and other written obligations to pay money
executed, signed, or delivered in Florida. The tax is calculated at the rate of 35 cents per $100 or fractional part
thereof of the indebtedness or obligation evidenced by the document.

Rule 12B-4.052(6), F.A.C., provides in pertinent part:

(b) Taxability of a written obligation to pay money is determined from the form and face of the document.

1. Whether a document is taxable is determined by reference to that document and any other document or documents
   expressly incorporated therein.
2. A document does not expressly incorporate another document by implication or by mere reference and description
   of the other document.
3. Express incorporation occurs when words in a document under examination provide that another document or
   documents are incorporated into the document under examination....
   Florida's documentary stamp tax, as imposed under s. 201.08(1)(a), F.S., is due on a master lease agreement if
   the master lease agreement is executed, signed, or delivered in Florida and if the master lease agreement contains
   within itself, or within itself and all other documents expressly incorporated within, an unconditional promise to pay a
   sum certain in money. Express incorporation does not exist when a document is only referred to in the body of
   another.
   Position of the Department
   A review of the documents (Master Lease, Supplement, and Certificate of Acceptance) provided with your request
   for a technical assistance advisement results in a determination that, when read alone, none contains an
   unconditional obligation to pay a sum certain in money. Therefore, neither the Master Lease, Supplement, nor
   Certificate of Acceptance is subject to the documentary stamp tax.
   The Master Lease does provide that "A Supplement shall refer to and incorporate by reference this Agreement
   and, when signed by the parties, shall constitute the lease (Lease) for the Equipment specified therein." This language
   does not expressly incorporate the Supplement, but only provides that the Supplement will refer to and incorporate by
   reference the agreement. However, a review of the Supplement resulted in no finding of express incorporation of the
   Master Lease or the Certificate of Acceptance. It is also determined that the Certificate of Acceptance does not
   expressly incorporate the Master Lease or the Supplement. Therefore, since there is no express incorporation, neither
   document can be read in combination with any other document to determine if there is an unconditional obligation to
   pay a sum certain in money. No documentary stamp tax, as imposed under s. 201.08(1)(a), F.S., is due on the
   documents reviewed, even if they are executed in Florida.
   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, your request and related backup documents are public records under
Chapter 119, 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,
Charles T. Phillips
Tax Law Specialist
Technical Assistance and Dispute Resolution
CTP/mh