Were an equipment lease, schedule, riders, and acceptance certificate subject to Florida documentary stamp tax when executed and delivered in Florida?

Plain-English summary

The equipment-lease relationship used four types of documents: a master lease, an equipment schedule, one or more riders, and an acceptance certificate. The lease, schedule, and riders were expressly incorporated and, read together, described the payment terms.

Even so, they did not create an unconditional obligation to pay a sum certain until the lessee acquired and accepted the equipment, evidenced by execution and delivery of the acceptance certificate.

The Department therefore concluded that the documents were not subject to documentary stamp tax, separately or collectively, even if executed and delivered in Florida, provided the acceptance certificate was executed and delivered after the lessee signed the lease, schedule, and riders.

What this means for you

The conclusion turned on both the documents' substantive contingency and their signing sequence. A lease package that creates an unconditional payment obligation earlier may produce a different result.

Common questions

Were the lease documents expressly incorporated? Yes.

Why were they not taxable? No unconditional obligation to pay existed until equipment acceptance.

What timing condition mattered? The acceptance certificate had to be executed and delivered after the lessee signed the other documents.

Citations and references

• Fla. Stat. § 201.08(1) and Fla. Admin. Code rr. 12B-4.052(6) and 12B-4.053(2)(a), as cited in the advisement.

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 12B4-005

Original ruling text

Interim
Executive
Director
Marshall Stranburg

QUESTION: Assuming the Lease, Schedule, Riders, and Acceptance Certificate are executed
and delivered in Florida, will there be any liability for documentary stamp tax?
ANSWER: No, the Lease, Schedule, Riders, and Acceptance Certificate are not subject to tax
independently or corporately as documents expressly incorporated, even if executed and
delivered in Florida, so long as the Acceptance Certificate is executed and delivered after the
signing by the lessee of the Lease, Schedule, and Riders.
September 26, 2012
XXX
XXX
XXX
Re: Technical Assistance Advisement 12B4-005
XXX (hereinafter “Taxpayer”)
Documentary Stamp Tax
Issue: Equipment Leases
Section 201.08(1), Florida Statutes (F.S.)
Rules 12B-4.052(6) and 12B-4.053(2)(a), Florida Administrative Code, (F.A.C)
Dear XXX:
This is in response to your request dated XXX, for a Technical Assistance Advisement (TAA)
pursuant to section 213.22, F.S., and Rule Chapter 12-11, F.A.C., regarding the documentary
stamp tax requirement on leases of personal property. An examination of your letter has
established that you have complied with the statutory and regulatory requirements for issuance of
a TAA. Therefore, the Department is hereby granting your request for a TAA.
Petitioner’s Statement of Facts
The Taxpayer is in the business of leasing equipment. Much of the business is conducted in
Florida.
Each lease relationship is documented with four documents. The overall relationship is
evidenced with an Equipment Lease Agreement (“Lease”), which contains the obligation to pay,
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Tallahassee, Florida 32399-0100

Technical Assistance Advisement 12B4-005
Page 2

default remedies, and other general terms of the lease relationship. The Lease does not contain a
description of the equipment, or any specific terms of payment. The equipment description and
the payment terms are contained in the second document, which is the Equipment Schedule
(“Schedule”). The Schedule contains a description of the leased property, location, monthly
payments terms, and whether any riders apply. The Schedule specifically incorporates the terms
of the Lease by reference, and the Lease specifically incorporates the terms of the Schedule.
Depending upon the type of lease included, one of four riders (“Riders”) is executed. The Riders
generally determine the rights and obligations of the lessee at the termination of the Lease. The
first page and second paragraph of the Lease provides that the term “Lease” shall also include
any riders or amendments to the Lease entered into with respect to either the Lease or any
Schedule. The first line of each Rider also provides that the Rider is part of the Lease.
The fourth document is an acceptance certificate (“Acceptance Certificate”). The terms of the
Lease provide that the obligation of the lessee to make lease payments is expressly subject to the
acquisition of the property by the Taxpayer and the execution and delivery of an Acceptance
Certificate by the lessee with regard to each item of the equipment leased. The Acceptance
Certificate references but is not incorporated into the Lease, nor does it incorporate the Lease by
reference. Each document requires the signature of the lessee and will be executed and/or
delivered in Florida.
Request for Advisement
Assuming the Lease, Schedule, Riders, and Acceptance Certificate are executed and delivered in
Florida, will there be any liability for documentary stamp tax?
Provisions of 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....

Technical Assistance Advisement 12B4-005
Page 3

Rule 12B-4.052(6)(b) 4., F.A.C., provides:
Following are examples of terminology whereby a document is expressly incorporated
into the document under examination.
d. [document] is a part is part of [this document]…
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.
The reviewed Lease, Schedule, and Riders are expressly incorporated. The documents when
considered together provide for an obligation to pay a sum certain in money contingent upon the
acquisition and acceptance of the equipment, as evidenced by the execution and delivery by the
lessee of an Acceptance Certificate. There is no unconditional obligation to pay money until the
Acceptance Certificate is executed and delivered.
Conclusion
The Lease, Schedule, Riders, and Acceptance Certificate are not subject to documentary stamp
tax, independently or corporately as documents expressly incorporated, even if executed and
delivered in Florida, so long as the Acceptance Certificate is executed and delivered after the
signing by the lessee of the Lease, Schedule, and Riders.
This response constitutes a Technical Assistance Advisement under Section 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 Section 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 documents are public records
under Chapter 119, F.S., which are subject to disclosure to the public under the conditions of
Section 213.22, F.S. Your name, address, and any other details, which might lead to
identification of the taxpayer, must be deleted before disclosure. In an effort to protect the
confidentiality of such information, we request you provide the undersigned with an edited copy
of your request for Technical Assistance Advisement, backup material and response within
fifteen days of the date of this advisement.
Sincerely,

Technical Assistance Advisement 12B4-005
Page 4

Celestine Turner
Tax Law Specialist
Technical Assistance and Dispute Resolution
CT/tlf
ID # 124746