Did a security agreement and related advance documents owe Florida documentary stamp or nonrecurring intangible tax?

Plain-English summary

A borrower used a security agreement for advances, together with a rider, amendment, plan supplement, request-for-advance form, and manufacturers' invoices. The agreement required repayment of advances plus interest but did not state a specific sum certain. The taxpayer asked whether the documents owed Florida documentary stamp tax or nonrecurring intangible tax.

Florida reached three separate results:

1. Written-obligation tax: None of the documents, standing alone, contained both an unconditional promise to pay a sum certain and the borrower's signature. The agreement, rider, and plan supplement were expressly incorporated, but even together did not contain a sum-certain promise. They therefore were not taxable under section 201.08(1)(a) on the reviewed facts.
2. Recorded-lien tax: The incorporated agreement package did encumber specific collateral. If any of those documents were filed or recorded in Florida as a mortgage or lien, section 201.08(1)(b) would impose documentary stamp tax on the maximum amount secured.
3. Nonrecurring intangible tax: The submitted documents did not specifically mortgage Florida real property, so section 199.133(1) did not apply. The tax would apply if Florida real property were later given as security for the agreement or another payment obligation.

The Department stressed that documentary stamp taxability was determined from the face of each document and any separate document expressly incorporated into it. Its answer covered only the documents submitted; additional loan documents could produce a different result.

What this means for you

Review the entire expressly incorporated package

Documents are not combined merely because they relate to the same loan. The cited rule required express incorporation language, and the Department then read the incorporated documents together.

A payment obligation needs a sum certain

For section 201.08(1)(a), the reviewed writing lacked the required combination of an unconditional monetary obligation, a fixed amount, and the obligor's signature.

Recording a lien is a separate taxable event

A package that escapes tax as a written obligation can still owe tax if it creates a lien and is filed or recorded in Florida.

Florida real-property collateral changes the intangible-tax analysis

The no-tax conclusion depended on the absence of a Florida real-property mortgage. Adding that collateral would bring the secured obligation within the nonrecurring intangible-tax rule described in the TAA.

Common questions

Q: Were the submitted documents taxable as written promises to pay?
A: No. They did not contain the required signed, unconditional promise to pay a sum certain.

Q: Could documentary stamp tax still apply if the documents were recorded?
A: Yes. Because some documents encumbered collateral, filing or recording them in Florida would trigger lien-based tax on the maximum secured amount.

Q: Why was no nonrecurring intangible tax due?
A: Nothing in the reviewed documents specifically mortgaged Florida real property.

Citations and references

• Fla. Stat. § 201.08(1)(a), (1)(b), and (6) (written obligations, recorded liens, and face-of-document review)
• Fla. Stat. § 199.133(1) (obligations secured by Florida real property)
• Fla. Stat. § 213.22 (Technical Assistance Advisements)
• Fla. Admin. Code r. 12B-4.052(6) (express incorporation)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 08M-003

Original ruling text

SUMMARY
QUESTION: Is Florida’s documentary stamp tax as imposed under section 201.08, F.S., and
nonrecurring intangible tax as imposed under section 199.133(1), F.S., due on specific
documents provided for review, more specifically, the Agreement, Rider A, Amendment to
Security Agreement, Plan Supplement, Request for Advance, and three manufacturers’ invoices.
ANSWER: 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.
Subsection 201.08(6), F.S., provides that, taxability of a document pursuant to s. 201.08, F.S., is
determined solely from the face of the document and any separate document expressly
incorporated into the document.
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, Rider A, Amendment to Security Agreement, Plan
Supplement, Request for Advance, and three manufacturers’ invoices 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 the documents that
are expressly incorporated, more specifically the Agreement, Rider A, and Plan Supplement, do
not, when considered as a single document, contain a promise to pay a sum certain in money and
therefore are not subject to documentary stamp tax as a single document.
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. The Agreement, Rider A, and Plan Supplement, are expressly
incorporated and do contain language that encumbers specific collateral. As such, if any or all of
these documents are filed or recorded in Florida, documentary stamp tax would be due on the
maximum amount secured thereby.
It is determined that nothing within the documents reviewed provide specifically for a mortgage
on Florida real property. The documents are not subject to nonrecurring intangible tax as

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imposed under 199.133(1), F.S. However, nonrecurring intangible tax as would be due if Florida
real property is given to secure the Agreement or any other obligation to pay money.
July 14, 2008
Re:

Technical Assistance Advisement No. 08M-003
Documentary Stamp Tax and Nonrecurring Intangible Tax
Security Agreement
Sections 201.08(1)(a), (b), (6) and 199.133(1), F.S.
XXX (“Taxpayer”)

Dear :
This is in response to your letter dated March 28, 2008, requesting a Technical Assistance
Advisement regarding application of Florida’s documentary stamp tax as imposed under
s. 201.08(1)(a), F.S., and Florida’s nonrecurring intangible tax as imposed under s. 199.133(1),
F.S., on documents executed in Florida that are part of a security agreement (“Agreement”).
Facts as Presented by Petitioner
The Agreement contains an obligation to repay the principal amount of all advances
made under the Agreement, plus accrued interest. The Agreement 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) 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, Rider A, Amendment to Security Agreement, [Taxpayer] Plan
Supplement, and Request for Advance. You have also requested that the Department rule
whether any taxes would be due if the debtor faxes a manufacturer invoice to XXX to
activate an advance instead of using the Request for Advance. Three sample invoices were
provided for review.
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

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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 by the
mortgage at the rate of $.35 per $100 or fraction thereof.
Subsection 201.08(6), F.S., provides that the application of documentary stamp tax on 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, even if the mortgage is
not filed or recorded, on Florida real property. The tax rate is two mills.
Position of the Department
It is determined that the Agreement, Rider A, Amendment to Security Agreement,
[Taxpayer] Plan Supplement, Request for Advance, and the three manufacturers’ invoices
provided for review are not subject to documentary stamp tax imposed under paragraph
201.08(1)(a), F.S., as independent documents, since no 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 the documents that are expressly incorporated, more specifically the Agreement,
Rider A, and [Taxpayer] Plan Supplement, do not, when considered as a single document,
contain a promise to pay a sum certain in money and therefore are not subject to documentary
stamp tax as a single document.
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. The Agreement, Rider A, and [Taxpayer] Plan Supplement are expressly
incorporated and do contain language that encumbers specific collateral. As such, if any or all of
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these documents are filed or recorded in Florida, documentary stamp tax would be due on the
maximum amount secured thereby.
It is determined that nothing within the documents reviewed provides specifically for a
mortgage on Florida real property. The documents are not subject to nonrecurring intangible tax
as imposed under s. 199.133(1), F.S. The nonrecurring intangible tax 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: 43923