Did Florida documentary stamp or nonrecurring intangible tax apply to the submitted line-of-credit documents?

Plain-English summary

A taxpayer submitted a line-of-credit agreement and related schedules, request forms, notices, a margin-call letter, and a rate sheet. The agreement stated a maximum credit line but did not state a specific sum certain that had to be repaid.

Florida found none of the reviewed documents independently subject to documentary stamp tax under section 201.08(1)(a). No document contained both an unconditional obligation to pay or repay a sum certain and the borrower's signature. The documents also did not expressly incorporate one another, so they could not be combined into a single taxable instrument.

That did not make the entire financing structure tax-free. A mortgage or other lien filed or recorded in Florida would owe documentary stamp tax under section 201.08(1)(b). And if Florida real property secured the agreement or another obligation to pay money, nonrecurring intangible tax would be due. The Department also warned that documents not submitted for review could change the result.

What this means for you

Florida examined the face of each document and any document expressly incorporated into it. A line-of-credit package may avoid tax as a stand-alone written obligation when the required fixed promise and signature are absent, while still becoming taxable through a recorded Florida lien or Florida real-property collateral.

Common questions

Were the submitted agreement and related forms independently stamp-taxable? No. None contained the required unconditional obligation to repay a sum certain together with the borrower's signature.

Could the Department combine the documents into one taxable instrument? No, because none expressly incorporated another reviewed document. Mere implication or reference was insufficient under the rule quoted in the ruling.

When would documentary stamp tax still apply? It would apply under section 201.08(1)(b) if a reviewed document purported to establish a mortgage or other lien and was filed or recorded in Florida.

When would nonrecurring intangible tax apply? It would be due if Florida real property secured the agreement or another written obligation to pay money.

Was the answer broader than the submitted papers? No. The Department stated that other documents used in the loan process might produce a different result.

Citations and references

• Fla. Stat. § 201.08(1)(a) (written obligations executed, signed, or delivered in Florida)
• Fla. Stat. § 201.08(1)(b) (mortgages and liens filed or recorded in Florida)
• Fla. Stat. § 201.08(6) (taxability determined from the document's face and expressly incorporated documents)
• Fla. Admin. Code r. 12B-4.052(6) (express incorporation)
• Fla. Stat. § 199.133(1) (nonrecurring intangible tax on obligations secured by Florida real property)
• Fla. Stat. § 213.22 (Technical Assistance Advisements)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 07M-005

Original ruling text

SUMMARY
QUESTION: Is Florida’s documentary stamp tax and nonrecurring intangible tax due on
specific documents provided for review, more specifically, the Agreement, Schedule A to Credit
Agreement, Schedule 1 to Schedule A to Credit Agreement, Schedule A-1 to Credit Agreement,
Exhibit A to Schedule A-1 to Credit Agreement, Schedule A-2 to Credit Agreement, Schedule
A-3 to Credit Agreement, Funds Transfer Request Form, the Funding Request-Private Bank
Form, a margin call letter, a notice of demand, and the Private Client Line Option Priced Rate
Sheet.
ANSWER – Based on the Facts Below: Documentary stamp tax as imposed under paragraph
201.08(1)(a), F.S., is due on any instrument executed, signed, or delivered in Florida that
contains an unconditional written obligation to pay money. The taxability of a document under
this paragraph is determined solely from the face of the document and any separate document
expressly incorporated into the document. Documentary stamp tax as imposed under paragraph
201.08(1)(b), F.S., is due on any mortgage or other lien filed or recorded in Florida.
Nonrecurring intangible tax as imposed under subsection 199.133(1), F.S., is due on notes and
other written obligations to pay money to the degree secured by a mortgage on Florida real
property.
It is determined that the Agreement, Schedule A, Schedule 1, Schedule A-1, Exhibit A, Schedule
A-2, Schedule A-3, Transfer Form, Funding Request Form, Margin Call Letter, Notice of
Demand, and Option Priced Rate Sheet provided for review are not subject to documentary
stamp tax imposed under paragraph 201.08(1)(a), F.S., as independent documents since neither
document contains an unconditional obligation to pay or repay a sum certain in money and the
signature of the borrower. It is also determined that neither of the documents reviewed contains
language that expressly incorporates it with any of the other documents reviewed and as such no
two or more of the documents reviewed can be considered as a single document for documentary
stamp tax purposes.
This determination was made based on review of only those documents that were submitted. If
other documents are used during the loan process, a different determination might result.
Documentary stamp tax as imposed under paragraph 201.08(1)(b), F.S., is due on a mortgage or
other lien filed or recorded in Florida. The documents reviewed and determined to not be subject
to documentary stamp tax as imposed under s. 201.08(1)(a), F.S., would be subject to tax
imposed under s. 201.08(1)(b), F.S., if they purport to establish a mortgage or lien and are filed
or recorded in Florida.
It is determined that nothing within the documents reviewed provide specifically for a mortgage
on Florida real property. However, nonrecurring intangible tax as imposed under s. 199.133(1),
F.S., would be due if Florida real property is given to secure the Agreement or any other
obligation to pay money.

June 27, 2007

Re:

Technical Assistance Advisement No. 07M-005
Documentary Stamp Tax and Nonrecurring Intangible Tax – Line of Credit Agreement
Paragraph 201.08(1)(a) and subsection 199.133(1), F.S.
XXX (“Taxpayer”)

Dear :
This is in response to your letter dated March 20, 2007, requesting a Technical Assistance
Advisement regarding application of Florida’s documentary stamp tax as imposed under s.
201.08(1)(a), F.S., upon documents executed in Florida that are part of a line of credit agreement
(“Agreement”).
Facts as Presented by Petitioner
The Agreement contains an obligation to repay the principal amount of all credit
advances made under the Agreement, plus accrued interest. The Agreement states the maximum
amount for the line of credit but does not contain a specific amount (or “sum certain”) that must
be repaid. As such, Taxpayer believes that the Agreement and all documents provided for
review are not subject to documentary stamp tax and nonrecurring intangible tax.
Request for Advisement
You request a determination by the Department of Revenue as to whether documentary stamp
tax as imposed under s. 201.08(1)(a), F.S., and nonrecurring intangible tax as imposed under s.
199.133(1), F.S., are due on the documents provided for review. The documents provided for
review are the Agreement, Schedule A to Credit Agreement (“Schedule A”), Schedule 1 to
Schedule A to Credit Agreement (“Schedule 1”), Schedule A-1 to Credit Agreement (‘Schedule
A-1”), Exhibit A to Schedule A-1 to Credit Agreement (“Exhibit A”), Schedule A-2 to Credit
Agreement (“Schedule A-2”), Schedule A-3 to Credit Agreement (“Schedule A-3”), Funds
Transfer Request Form (“Transfer Form”), the Funding Request-Private Bank Form (“Funding
Request Form”), a margin call letter (“Margin Call Letter”), a notice of demand (“Notice of
Demand”), and the Private Client Line Option Priced Rate Sheet (“Option Priced Rate Sheet”).
Law and Discussion
Paragraph 201.08(1)(a), F.S., imposes documentary stamp tax on promissory notes and
other written obligations to pay money, executed, signed or delivered in Florida. A document
executed, signed or delivered in Florida is taxable if it contains an unconditional obligation to
pay, or repay, a sum certain in money and the signature of the obligor. The tax is based on the
amount of the obligation at the rate of $.35 per $100 or fraction thereof.

Paragraph 201.08(1)(b), F.S., imposes documentary stamp tax on mortgages or liens filed
or recorded in Florida. The tax is based on the total amount of all obligations secured thereby at
the rate of $.35 per $100 or fraction thereof.
Subsection 201.08(6), F.S., provides that the taxability of a document shall be determined
solely from the face of the document and any separate document expressly incorporated into the
document. Rule 12B-4.052(6), F.A.C., provides that a document does not expressly incorporate
another document by implication or by mere reference and description of the other document.
Examples of terminology whereby a document is expressly incorporated into the document under
examination include, but are not limited to: (document) is incorporated herein; (document) the
terms of which are incorporated herein; (document) is made a part hereof; (document) is made a
part of; and (document) shall become a part of.
Subsection 199.133(1), F.S., imposes nonrecurring intangible tax on notes and other
written obligations to pay money to the degree secured by a mortgage on Florida real property.
Position of the Department
It is determined that the Agreement, Schedule A, Schedule 1, Schedule A-1, Exhibit A,
Schedule A-2, Schedule A-3, Transfer Form, Funding Request Form, Margin Call Letter, Notice
of Demand, and Option Priced Rate Sheet provided for review are not subject to documentary
stamp tax imposed under paragraph 201.08(1)(a), F.S., as independent documents since none of
the documents contain an unconditional obligation to pay or repay a sum certain in money and
the signature of the borrower. It is also determined that none of the documents reviewed contain
language that expressly incorporates it with any of the other documents reviewed, and as such no
two or more of the documents reviewed can be considered as a single document for documentary
stamp tax purposes.
This determination was made based on review of only those documents that were
submitted. If other documents are used during the loan process, a different determination might
result.
Documentary stamp tax as imposed under paragraph 201.08(1)(b), F.S., is due on a
mortgage or other lien filed or recorded in Florida. The documents reviewed and determined to
not be subject to documentary stamp tax as imposed under s. 201.08(1)(a), F.S., would be subject

to tax imposed under s. 201.08(1)(b), F.S., if they purport to establish a lien and are filed or
recorded in Florida.
It is determined that nothing within the documents reviewed provides specifically for a
mortgage on Florida real property. However, nonrecurring intangible tax as imposed under s.
199.133(1), F.S., would be due if Florida real property is given to secure the Agreement or any
other obligation to pay money.

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
Record ID: 30033