Were an automobile lender's separate approval, check, agreement, disclosure, instruction, and thank-you documents subject to Florida documentary stamp tax?

Plain-English summary

An out-of-state automobile lender sent borrowers a package containing approval and welcome letters, a check, a fixed-rate loan and security agreement, disclosure statements, an instruction guide, and a later thank-you letter.

Florida found the reviewed documents were not subject to documentary stamp tax as written obligations. Taxability required three elements within one document or through express incorporation: an unconditional written promise to pay, a sum certain, and the borrower's signature.

The pieces were split among documents without express incorporation. For example, the signed check stated a sum but had no promise to pay; the agreement contained a payment promise but was unsigned; and the letters and disclosures likewise lacked one or more required elements.

The ruling preserved a separate caveat: a document that purports to establish a lien can be taxable if filed or recorded in Florida.

What this means for you

Florida looks at the four corners of each obligation and any documents it expressly incorporates. A transaction may involve a real debt without producing a taxable written obligation if the required elements are scattered across unincorporated documents.

Common questions

Did signing the automobile check make it taxable? No. The check lacked a promise-to-pay provision.

Did the loan agreement make the package taxable? No. The reviewed agreement was not signed by the borrower and did not incorporate the check.

Could recording change the answer? Yes, if a document purported to establish a lien and was filed or recorded in Florida.

Citations and references

• Fla. Stat. § 201.08(1)(a) and (b) (written obligations and recorded liens)
• Fla. Admin. Code rr. 12B-4.052(6) and 12B-4.054(4) (required obligation elements)
• Fla. Stat. § 213.22 (Technical Assistance Advisements)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 08B4-002

Original ruling text

SUMMARY
QUESTION: Are loan documents used to purchase automobiles from a lender that do no not
contain an unconditional written obligation to pay; a sum certain in money; signed by the
borrower within the four corners of each document or that do not incorporate the other
documents that contain these items subject to documentary stamp tax ?
ANSWER: In order to be taxable under s. 201.08, F.S., a document must contain an
unconditional written promise to pay; a sum certain in money; and the signature of the borrower;
or must expressly incorporate other documents by reference that contain these items.. Loan
documents not meeting these criteria are not subject to documentary stamp tax unless they
purport to establish a lien and are filed or recorded in Florida.
March 26, 2008
Re:

Technical Assistance Advisement No. 08B4-002
Documentary Stamp Tax
Loan Documents – Automobile Loans
Section 201.08(1), F.S., Rules 12B-4.052(6), 12B-4.054(4), F.A.C.
XXX (“Taxpayer”)

Dear:
This is in response to your letter dated January 9, 2008, requesting a Technical Assistance
Advisement regarding application of Florida’s documentary stamp tax as imposed under s.
201.08(1)(a), F.S., upon certain loan documents (the “Loan Documents”).
FACTS AS PRESENTED BY PRACTITIONER
Taxpayer, an out-of-state entity with its principal place of business outside Florida, is in
the business of making loans to borrowers (“Borrowers”) for the purpose of purchasing
automobiles. Application for a loan may be made by calling the Taxpayer, accessing the
Taxpayer’s website or visiting a Taxpayer branch in person. Once a loan application is approved
the Taxpayer sends the following Loan Documents to the Borrower:
1.
2.
3.
4.
5.
6.

Welcome Letter (“Welcome Letter”);
Check Ready Instructions and Check (“Check”);
Fixed Rate Consumer Loan and Security Agreement (the “Agreement”)
Truth-In-Lending Disclosure Statements (the “Statements”)
Instruction Guide (“Instruction Guide”); and
Thank You Letter (“Thank You Letter”).

If the Borrower applies for the loan at a branch and the application is approved, the
Borrower receives a written “Approval Letter” in addition to the Loan Documents listed above.
In the case of an Approval Letter and a Welcome Letter, both documents notify the Borrower

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that the loan has been approved up to a maximum amount and describes the general terms of the
loan, including the maximum amount of the loan, the interest rate and the validity period of the
loan approval.
The remainder of the Loan Documents contains the following:
(1) The Check, which may be used towards the purchase of or a new or used
automobile up to the maximum amount upon completion and signature by
the Borrower.
(2) The Agreement, which sets forth the repayment terms of the loan.
(3) The Statements, which contain certain disclosures that the Taxpayer must
provide to the Borrower pursuant to federal law.
(4) The Instruction Guide, which provides information to the Borrower regarding
how to use and the purpose for the Statements.
(5) The Thank You Letter, which summarizes the loan terms and is sent to the
Borrower after the Check is used by the Borrower.
REQUESTED RULING
Taxpayer requests a ruling that the Loan Documents are exempt from Florida
documentary stamp tax based on the premise that none of the Loan Documents contain all of the
essential elements meeting the requirements for taxability under the provisions of s. 201.08, F.S.
LAW AND DISCUSSION
Section 201.08(1), F.S., provides that for a written obligation to pay money that is made,
executed, delivered, sold, transferred, or assigned in the State, and for each renewal of the same,
the documentary stamp tax shall be $.35 cents on each $100 or fraction thereof of the
indebtedness or obligation evidenced thereby.
In order to be taxable under s. 201.08, F.S., a written obligation to pay money must have
the following three elements within the four corners of the document or must incorporate other
documents containing these elements:

1. An unconditional written promise to pay;
2. A sum certain in money; and
3. The signature of the borrower.
   See Rules 12B-4.052(6), 12B-4.054(4), F.A.C.
   Line of credit documents signed by a borrower that contain a written promise to pay
   “any and all amounts due hereunder” without specifying a sum certain the borrower promises to

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repay are not subject to documentary stamp tax, as they do not meet the parameters of element

2 listed above. Likewise, line of credit documents which specify a sum certain but do not

contain an unconditional promise to pay are not taxable, as element #1 listed above is not met.
DEPARTMENT’S POSITION
Based on the above, it is the Department’s opinion the Loan Documents submitted for
examination are not subject to documentary stamp tax for the reasons listed below:

1. The Approval Letter and the Welcome Letter are not signed by the Borrower, do not
   contain an unconditional promise to pay a sum certain in money, and do not contain
   language that expressly incorporate any of the other Loan Documents;
2. The Check, signed by the Borrower for a sum certain, does not contain any promise
   to pay language, nor does it contain language that expressly incorporates any of the
   Loan Documents including the Agreement;
3. The Agreement contains a promise to pay the principal amount of the Check and all
   finance charges and interest thereon, however it is not signed by the Borrower, nor
   does it contain language that expressly incorporates any of the other Loan
   Documents, including the Check;
4. The Statements and the Instruction Guide do not contain an unconditional promise to
   pay a sum certain in money or the signature of the Borrower, nor do they contain
   language that expressly incorporate any of the Loan Documents by reference;
5. The Thank You Letter contains a sum certain in money; however it does not contain a
   promise to pay and is not signed by the Borrower, nor does it expressly incorporate
   any of the other Loan Documents.
   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.
   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.

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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,

Joy B. Eldred, C.P.A.
Tax Law Specialist
Technical Assistance & Dispute Resolution
Record ID: 40284