Were separate closed-end loan disclosure and loan-agreement forms subject to documentary stamp tax when neither contained every required element?

Plain-English summary

The Florida Department of Revenue concluded that separate disclosure and loan-agreement forms used in closed-end loans were not subject to documentary stamp tax.

The disclosure statement showed the amount financed but lacked an unconditional promise to pay and the borrower's signature. The loan agreement contained the signed promise but no sum certain. Although the agreement referenced the disclosure, it did not expressly incorporate it.

Florida determines document tax from the face of the document and any other document expressly made part of it. Because no single document or expressly incorporated set contained all required elements, the forms were untaxed.

What this means for you

Lenders and form designers

Small drafting differences matter. A cross-reference is not necessarily express incorporation, and adding incorporation language can change the tax analysis.

Closing teams

Review the signed document set for the promise, sum certain, signature, and exact incorporation wording.

Common questions

Q: Could the two forms' elements be combined?
A: No, because the loan agreement did not expressly incorporate the disclosure statement.

Q: Were the reviewed forms taxable?
A: No.

Citations and references

• Fla. Stat. §§ 201.08(1)(a), (1)(b), and (6), and 213.22
• Fla. Admin. Code rr. 12B-4.052(6)(b) and 12B-4.054(29)

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 13B4-001

Original ruling text

Interim
Executive
Director
Marshall Stranburg

QUESTION: Is documentary stamp tax due on a Closed End Loan Disclosure Statement and a Closed
End Loan and Security Agreements provided for use in closed end loan transactions.
ANSWER: The Disclosure Statement contains the amount financed; however, the Disclosure Statement
does not contain an unconditional promise to pay a sum certain in money or the signature of the borrower.
It also does not expressly incorporate any other document. The Loan Agreement does contain a promise
to pay and requires the signature of a borrower; however, it does not contain a sum certain in money. The
Loan agreement makes reference to the Disclosure Statement, but it does not expressly incorporate it or
any other document. Therefore, the documents are not subject to documentary stamp tax.
January 24, 2013

XXX
XXX
XXX
Re:

Technical Assistance Advisement No. 13B4-001
Documentary Stamp Tax – Closed End Loan Disclosure Statement and Closed End Loan and
Security Agreement
Section 201.08(1)(a),(b), Florida Statutes, (F.S.)
Rules 12B-4.052(6)(b), 12B-4.054(29), Florida Administrative Code, (F.A.C.)
XXX (Taxpayer)

Dear XXX:
This is in response to your request dated XXX, for a Technical Assistance Advisement (TAA) pursuant to
s. 213.22, F.S., and Rule Chapter 12-11, F.A.C., concerning the application of documentary stamp tax on
documents provided by Taxpayer to XXX operating in Florida. 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.

Child Support Enforcement – Ann Coffin, Director  General Tax Administration – Maria Johnson, Director
Property Tax Oversight – James McAdams, Director  Information Services – Tony Powell, Director

www.myflorida.com/dor
Tallahassee, Florida 32399-0100

Technical Assistance Advisement 13B4-001
Page 2

FACTS PRESENTED
Taxpayer provides loan transaction documents to XXX in Florida. The loan documents are used in closed
end loan transactions. The two documents provided for review are a XXX (Disclosure Statement) and a
XXX (Loan Agreement). You asserted that while the Disclosure Statement contains a specific amount of
money financed, it does not contain a promise to pay money or the signature of the borrower. You further
asserted that the Loan Agreement contains a promise to pay money and is signed by the borrower, but it
does not contain a sum certain in money. You stated that neither document “expressly incorporates” the
other document.
REQUESTED ADVISEMENT
You request that the Department rule whether the Disclosure Statement and Loan Agreement would be
subject to documentary stamp tax when they are part of a closed end loan transaction.
APPLICABLE LAW AND DISCUSSION
Section 201.08(1)(a), F.S., provides that for a written obligation to pay money, which 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 on each $100 or fraction thereof of the indebtedness or obligation evidenced thereby. Under
section 201.08(6), F.S., the taxability of a document is to be determined solely from the face of the document
and any separate document expressly incorporated into the document.
Rule 12B-4.052(6)(b), F.A.C., dealing with documentary stamp tax, provides that the taxability of a written
obligation to pay money 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. Express incorporation occurs when words in a document provide that another document or documents
are incorporated therein. Some examples of express incorporation include:
• [document] is incorporated herein;
• [document] the terms of which are incorporated herein;
• [document] is made a part hereof;
• [document] is a part of [this document];
• The agreement consists of [this document] and [separate document] the same as if it were fully set forth
herein;
• [document] shall become a part of [separate document]; and
• [document] and [separate document] constitute a single document.
Rule 12B-4.053(1), F.A.C., provides that the tax is on the “Promise to Pay” and each renewal thereof, and to
be a “note or other obligation” it must be signed by the maker or obligor to be taxable therein.
In order to be taxable under s. 201.08(1)(a), F.S., a written obligation to pay money must have the following
three elements within the four corners of the document or must expressly incorporate other documents such
that, when the documents are read together, they contain these elements:

Technical Assistance Advisement 13B4-001
Page 3

1. A written promise to pay;
2. A sum certain in money; and
3. The signature of the borrower.
   Section 201.08(1)(b), F.S., provides that for mortgages, trust deeds, security agreements, or other evidences of
   indebtedness filed or recorded in this state, and for each renewal of the same, the documentary stamp tax shall
   be $.35 on each $100 or fraction thereof of the indebtedness or obligation evidenced thereby.
   Rule 12B-4.054(29), F.A.C., provides that the filing or recording in Florida of a UCC Financing Statement is
   not taxable under s. 201.08(1), F.S., unless the note, security agreement or other obligatory document is also
   filed or recorded. However, a notation relative to stamp tax is required on the UCC Financing Statement
   whether tax is due or not. The notation shall state that proper stamp taxes under Chapter 201, F.S., have been
   placed on the promissory instruments and will be placed on any additional promissory instrument, or that tax is
   not required.

CONCLUSION
The documents submitted for review that will be provided to XXX for use in closed end loan transactions
are not subject to documentary stamp tax for the following reasons:
1) The Disclosure Statement contains the amount financed; however, the Disclosure Statement
does not contain an unconditional promise to pay a sum certain in money or the signature of
the borrower. It also does not expressly incorporate any other document. Neither is it
expressly incorporated into any other document that was presented for review.
2) The Loan Agreement does specify a promise to pay and requires the signature of a borrower;
however, it does not contain a sum certain in money. The Loan agreement makes reference to
the Disclosure Statement, but it does not expressly incorporate it or any other document.
If the Loan Agreement or any other mortgage or lien is filed or recorded in Florida, including filing the
Loan Agreement with a Florida UCC-1 Financing Statement, documentary stamp tax is due on the
recorded document as imposed under s. 201.08(1)(b), F.S. If an existing mortgage or lien currently filed
or recorded in Florida is spread to secure the debt evidenced in either or both of the documents reviewed,
documentary stamp tax is due on the recorded mortgage or lien based on the additional amount secured.
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 documents are public records under
Chapter 119, F.S., which are subject to disclosure to the public under the conditions of s. 213.22, F.S.

Technical Assistance Advisement 13B4-001
Page 4

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,

Henry Small
Tax Law Specialist
Technical Assistance and Dispute Resolution
HJS/tlf
Record ID: 134549