Did Florida documentary stamp tax apply when out-of-state notes were later brought into Florida for safekeeping and servicing?

Plain-English summary

Florida found no documentary stamp tax due when promissory notes were executed and delivered outside Florida and later sent into Florida only for safekeeping and ministerial servicing, provided the bank used the approved proof.

The national bank consolidated loan documents from non-Florida regions into a Florida location. Because a note payable to a Florida lender and held in Florida was otherwise presumed taxable, the ruling approved document language, lender certifications, borrower/lender certifications, and out-of-state affidavits that created a rebuttable presumption of out-of-state execution and delivery.

The same procedures applied to out-of-state renewals. A renewal completed in Florida was taxable unless it satisfied section 201.09(1).

This document formally self-identifies as TAA 99B4-019 and says it supersedes TAA 98(M)-005 where applicable, despite the conflicting official search label.

What this means for you

Physical storage in Florida did not itself tax a qualifying out-of-state note, but the bank needed contemporaneous, transaction-specific evidence of both execution and delivery outside Florida.

Common questions

Q: Was out-of-state execution alone enough? No. Delivery also had to occur outside Florida.

Q: Could the notes later be serviced in Florida? Yes, under the approved ministerial-servicing facts.

Q: Was the presumption absolute? No. The Department could rebut it with contrary evidence.

Q: What identifier does the ruling itself use? TAA 99B4-019.

Citations and references

• Fla. Stat. § 201.08 — documentary stamp tax on promissory notes
• Fla. Stat. § 201.09(1) — renewals
• Fla. Admin. Code r. 12B-4.053(34) — evidence of out-of-state execution and delivery
• Fla. Stat. § 213.22 — Technical Assistance Advisements

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 99B4-019

Original ruling text

SUMMARY

QUESTION: Is documentary stamp tax due on promissory notes
executed and delivered outside Florida and subsequently
brought into Florida for warehousing and servicing?

ANSWER - Based on Facts Below: No documentary stamp tax is
due on the promissory notes executed outside Florida and
subsequently brought into Florida for warehousing and
servicing so long as the documentation and affidavits
provided are used. The documentation and affidavits
provided were sufficient to prove that the notes were
executed and delivered outside Florida.

Dec 21, 1999

Re: Technical Assistance Advisement No. 99(B)4-019
Documentary Stamp Tax: Safekeeping of Out-of-State Notes in
Florida
Section 201.08, F.S. and Rule 12B-4.053(34), F.A.C.

Dear :

This is in response to your August 2, 1999, request for a
Technical Assistance Advisement pursuant to s. 213.22, F.S., and
Rule 12-11.003, F.A.C., regarding the application of Florida's
documentary stamp tax imposed by s. 201.08, F.S., upon notes
made, executed and delivered outside Florida and subsequently
brought into Florida for safekeeping. This Technical Assistance
Advisement supersedes, where applicable, Technical Assistance
Advisement 98(M)-005.

Facts Presented by Petitioner

XXX (the "National Bank") is a national banking association
which maintains its principal place of business in XXX. The
National Bank conducts business in Florida and in several other
states through separate business locations in those states.

Previously, the National Bank conducted business in each state
through a separate entity which was itself a separate national
banking association. For example, XXX (the "XXX Bank")
conducted business in Florida and XXX (the "XXX Bank") conducted
business in XXX. On XXX, the XXX Bank and the XXX Bank were
merged into XXX. Thereafter, the name was changed to XXX.
Subsequent to that time, other separate state banks within the
XXX family were merged into the National Bank. As a result of
the foregoing, the National Bank now has a physical presence in
and conducts business as a single entity in the several states
in which the separate state level banks formerly conducted
business. Even though the National Bank is a single entity, it
continues to account for its operations and those of its
affiliates on a local basis, with some former separate banks
organized into administrative regions. The Florida operations
of the National Bank are administered as a separate region
internally and its operations are accounted for separately for
internal reporting purposes.

1. Events Prior to Consolidation

Prior to the consolidation, in an effort to streamline and
consolidate certain operations, the XXX Bank and the XXX Bank
implemented a program whereby the XXX Bank warehoused and held
for safekeeping and servicing in Florida promissory notes made
payable to the XXX Bank. The XXX Bank and the XXX Bank
accomplished this by the XXX Bank transmitting to the XXX Bank:
(i) existing promissory notes made payable to the XXX Bank and
related security documents in the possession of the XXX Bank as
of the initial transmittal date together with (ii) promissory
notes which were executed and made payable to the XXX Bank after
the initial transmittal date and the security documents related
thereto (collectively, the "XXX Documents"). These XXX
Documents were executed by the customers of the XXX Bank (the
"XXX Borrowers") and delivered to the XXX Bank outside of the
State of Florida and evidence loans made by the XXX Bank to the
XXX Borrowers. The XXX Bank transferred the servicing function
associated with the XXX Documents to personnel located here in
Florida and employed by the XXX Bank (the "XXX Bank Personnel").
In servicing these loans, the XXX Bank Personnel merely provided
ministerial functions in connection with, and had no

discretionary authority associated with, the loans evidenced by
the XXX Documents. The XXX Bank and its personnel in XXX made
any and all decisions pertaining to the underwriting,
enforcement, collection, extension and renewal of the loans
evidenced by the XXX Documents, including the decision to extend
credit, the decision to renew existing credit, the decision to
grant additional time for payment, the declaration of defaults
and the acceleration of the loans.

Contemporaneously with the transfer of the XXX Documents to
Florida, in order to evidence the execution and delivery of the
existing XXX Documents outside of the State of Florida, a duly
authorized officer of the XXX Bank executed an affidavit listing
the loans evidenced by the XXX Documents transmitted for
safekeeping by the XXX Bank to the XXX Bank and certifying that
such XXX Documents were executed and delivered outside the State
of Florida (the "Officer's Affidavit"). With respect to the XXX
Documents, created and executed subsequent to the implementation
of this streamlining procedure, loan closing statements executed
by the XXX Bank and the XXX Borrower in connection with the
closing of such loans contain a statement certifying that the
Borrower and the XXX Bank executed and delivered the loan
documents in XXX.

2. Events After Consolidation

The National Bank has recently consolidated certain
functions and eliminated duplicate costs by establishing three
separate facilities in three separate states (XXX) to
collectively warehouse the vast majority of loans made by the
National Bank. The types of loan documents stored in each of
these three respective states will vary based upon the type of
loan and the geographic location of the office making the loan.
Furthermore, in all likelihood, the categories of loans kept in
the separate warehousing facilities will change from time to
time. For example, commercial line of credit loans closed in
XXX by a XXX office of the National Bank are presently stored in
Florida but may, in the future, be stored in XXX and vice versa.
Additionally, as and when the National Bank acquires other banks
in the future, whether by merger into the National Bank or by
acquisition through a subsidiary of the National Bank, it is

possible that the loan documents pertaining to loans made by the
acquired banking institution will eventually be stored in
Florida for safekeeping.

It is presently anticipated that the Florida Region will
warehouse and hold for safe keeping promissory notes and related
loan documents pertaining to loans made by the National Bank in
XXX and other non-Florida regions of the National Bank, as well
as various Affiliates (each individually, a "Non-Florida Region"
and collectively the "Non-Florida Regions"). In order to
accomplish this, it is proposed that these Non-Florida Regions
transmit to the Florida Region: (i) all existing promissory
notes and related loan documents pertaining to loans made by
these Non-Florida Regions, together with (ii) all promissory
notes and related loan documents pertaining to loans made by
these Non-Florida Regions in the future (collectively, the "Loan
Documents"). These Loan Documents were or will be executed
outside the State of Florida by customers of the separate NonFlorida Regions of the National Bank (the "Borrowers") and were
or will be delivered to the separate Non-Florida Regions outside
of the State of Florida and evidence or will evidence loans made
by the Non-Florida Regions to their Borrowers. The ministerial
servicing functions associated with the Loan Documents will also
be transferred to employees of the National Bank in Florida (the
Florida Personnel"); provided, however, all discretionary
authority and functions pertaining to these Loan Documents will
be retained by the Non-Florida Regions transmitting the Loan
Documents to Florida.

In order to maintain the separate identity of the Loan
Documents originated by the Non- Florida Regions and
differentiate those loans from the loans made in the Florida
Region by the National Bank and to evidence which loans (and
more particularly which notes) are subject to Florida
documentary stamp taxes and which are not, the National Bank has
established the following systems, practices and procedures and
documentation:

(a) The National Bank has in place a sophisticated
computerized commercial loan accounting system (the
"Accounting System") which it uses for the purpose of

tracking loans made by both the Florida and NonFlorida Regions of the National Bank. Under this
Accounting System, each state in which the National
Bank has a branch is assigned a separate, unique
identification number (a "State Identification
Number") and each loan made by the National Bank is
assigned a separate loan identification number (a
"Loan Identification Number"). Each loan file contains
as part of the number the separate State
Identification Number identifying the state in which
the loan was made. Each loan maintains the same Loan
Identification Number so long as it remains owned by
that particular region of the National Bank. With this
Accounting System, the National Bank is able to call
up information by state code and, for example, print
out a listing of loans made by a particular NonFlorida Region which remain outstanding on that
particular date.

(b) All promissory notes generated by the National Bank
will contain the address of the particular region of
the National Bank in which the loan was made and will
also contain the address of the borrower signing the
promissory note.

(c) The Loan Documents for each loan warehoused in Florida
will be segregated by the Loan Identification Number
and Bank/Region number assigned to the loan evidenced
by the documents contained in the file. This Loan
Identification Number on the file will correspond to
the Loan Identification Number maintained in the
Accounting System described above.

(d) Once a decision is made to warehouse a particular type
of existing Loan Documents from a Non-Florida Region
of the National Bank in Florida, the transmittal of
those Loan Documents in existence on the date of
initial transmittal will be accompanied by an
affidavit of a duly authorized officer of the National
Bank in substantially the form attached hereto as
Exhibit "B".

(e) Subsequent to the initial transmittal of a particular
type of existing Loan Documents from outside of
Florida by a Non-Florida Region of the National Bank,
Promissory Notes which are thereafter prepared by or
on behalf of such Non-Florida Region and executed and
delivered outside of Florida by a non-Florida borrower
(established by address in Promissory Note) will
either: (i) contain a statement in substantially the
form attached hereto as Exhibit "C", or (ii) be
accompanied by a separate Borrower Certification in
the form attached hereto as Exhibit "D".

(f) Subsequent to the initial transmittal of a particular
type of existing Loan Documents from outside of
Florida by a Non-Florida Region of the National Bank,
Promissory Notes of the same particular type which are
thereafter prepared by or on behalf of such NonFlorida Region and executed and delivered outside of
Florida by Florida borrowers (established by address
in Promissory Note) will be accompanied by the
following:

(i) in the case of loans having an original stated
principal amount of $10,000,000 or less, either (1) a
statement in the Promissory note in substantially the
form attached hereto as Exhibit "C" together with a
Lender Certification in the form attached hereto as
Exhibit "E", or alternatively (2) a separate
Borrower/Lender Certification in the form attached
hereto as Exhibit "F"; and

(ii) in the case of loans having an original stated
principal amount in excess of $10,000,000, an
affidavit of out-of-state execution and delivery in
the form described in Rule 12B-4.053(34), F.A.C.

Request for Advisement

Based on the foregoing facts, the National Bank requests a
Technical Assistance Advisement addressing the following issue:

Will the systems, practices, procedures and documentation
described above be sufficient to create a presumption
(rebuttable only upon evidence to the contrary presented by the
Department of Revenue) that the Loan Documents transmitted by
the Non-Florida Regions of the National Bank from outside of
Florida for warehousing and servicing in Florida were executed
and delivered outside the State of Florida and therefor are
exempt from Florida documentary stamp tax even though such Loan
Documents are now warehoused and serviced in Florida?

Law and Discussion

Section 201.08, F.S., imposes documentary stamp tax on
promissory notes executed or delivered in the State of Florida.
Promissory notes executed and delivered in another state are not
generally subject to the tax. Promissory notes physically
located in Florida must be distinguished by the content within
the document itself or other evidence as required by Rule 12B4.053(34), F.A.C., to establish that there is no basis for
imposition of the tax.

Rule 12B-4.053(34), F.A.C., provides in part:

Promissory notes, nonnegotiable notes, and written
obligations to pay money (hereinafter, called notes)
made, executed, and delivered to a Florida lender in
another state are not subject to Florida's documentary
stamp tax. If the notes then are brought into Florida
for collection after they have been made, executed,
and delivered to the Florida lender, or its agent, in
another state, no tax is due. However, if a note is
made and executed in another state and delivered to
the lender in Florida, the note would be subject to
tax. The Department will presume that if a note is
made payable to a Florida lender and the note is held
by the Florida lender in Florida, then tax will be due
unless the lender can establish that the note was
made, executed, and delivered to the lender outside
the state....

Rule 12B-4.053(34), F.A.C., also sets forth certain
regulatory procedures for Florida lenders to follow in order to
establish that a promissory note is executed and delivered outof-state. Rule 12B-4.053(34)(a), F.A.C., provides that proof
sufficient to establish that a note is not subject to tax
includes "[a] sworn affidavit made before an out-of-state notary
public at the time of signing of the note by the borrower(s) and
delivery of the note to the lender attesting that the signing
and delivery of the note occurred in the presence of an out-ofstate notary." In addition, to establish that a note is not
subject to tax, Rule 12B-4.053(34)(b), F.A.C., provides that the
note itself "could bear a notarization and acknowledgment as to
where the note was executed, together with an affidavit made
before an out-of-state notary by the lender attesting that the
note was delivered to the lender, or its agent out-of-state."
Furthermore, Rule 12B-4.053(34)(c), F.A.C., provides that
sufficient proof of out-of-state execution and delivery also
includes "[a]ny other proof that the borrower made, executed,
and delivered the note in another state to a Florida lender."

The Department understands that Loan Documents executed
prior to the initial transmittal could not have had an affidavit
prepared at the time of execution since the National Bank and
the separate Non-Florida Regions and their predecessors (the
individual state national banks) did not anticipate that the
promissory notes would come into Florida for safekeeping. The
Department also understands that residents of states other than
Florida may question why they are required to sign an affidavit
under oath pertaining to Florida tax matters when the note is
executed outside Florida.

The National Bank and the Florida Region have adopted the
above referenced procedures and practices, as provided above
under "2. Events After Consolidation", with the belief that this
should provide sufficient evidence to the Department that such
documents are not subject to Florida documentary stamp taxes.

Department's Response

The following is the Department's response concerning
acceptable treatment of the scenarios established under the

systems, practices, procedures and documentation as described
above under "2. Events After Consolidation".

(a) Acceptable as presented.

(b) Acceptable as presented.

(c) Acceptable as presented.

(d) Sufficient to create a presumption, rebuttable only
upon evidence to the contrary presented by the
Department of Revenue, that the Loan Documents were
executed and delivered outside Florida and therefore
not subject to documentary stamp tax even though such
Loan Documents are now warehoused and ministerially
serviced (as described in the above presented facts)
in Florida.

(e) Subsequent to the initial transmittal of a particular
type of existing Loan Documents from outside of
Florida by a Non-Florida Region of the National Bank,
Promissory Notes which are thereafter prepared by or
on behalf of such Non-Florida Region and executed and
delivered outside of Florida by a non-Florida borrower
(established by address in Promissory Note) must
either: (i) contain a statement in substantially the
form attached hereto as your Exhibit "C", or (ii) be
accompanied by a separate Lender Certification in the
form attached hereto as your Exhibit "E", or (iii) be
accompanied by a separate Borrower/Lender
Certification in the form attached hereto as your
Exhibit "F". Compliance with the foregoing procedures,
so long as the attached exhibit or the statement
contained within the Promissory Note provides that the
Promissory Note was executed in a state other than
Florida, will be sufficient to create a presumption,
rebuttable only upon evidence to the contrary
presented by the Department of Revenue, that the
Promissory Note was executed and delivered outside
Florida and therefore not subject to documentary stamp
tax even though such Promissory Note is now warehoused

and ministerially serviced (as described in the above
presented facts) in Florida.

(f) Subsequent to the initial transmittal of a particular
type of existing Loan Documents from outside of
Florida by a Non-Florida Region of the National Bank,
Promissory Notes, no matter the loan amount, of the
same particular type which are thereafter prepared by
or on behalf of such Non-Florida Region and executed
and delivered outside of Florida by Florida borrowers
(established by address in Promissory Note) must be
accompanied by either (i) a statement in the
Promissory note in substantially the form attached
hereto as your Exhibit "C", or (ii) be accompanied by
a separate notarized Lender Certification in the form
attached hereto as your Exhibit "E", or (iii) a
separate notarized Borrower/Lender Certification in
the form attached hereto as your Exhibit "F", or (iv)
an affidavit of out-of-state execution and delivery in
the form described in Rule 12B-4.053 (34), F.A.C., of
which your Exhibit "B" as attached hereto is deemed
acceptable. Compliance with the foregoing procedures,
so long as the attached exhibit or the statement
contained within the Promissory Note provides that the
Promissory Note was executed in a state other than
Florida, will be sufficient to create a presumption,
rebuttable only upon evidence to the contrary
presented by the Department of Revenue, that the
Promissory Note was executed and delivered outside
Florida and therefore not subject to documentary stamp
tax even though such Promissory Note is now warehoused
and ministerially serviced (as described in the above
presented facts) in Florida.

Out-of-state renewals of any of the Loan
Documents/Promissory Notes requires the same systems, practices,
procedures and documentation as described above. The renewal of
any of the Loan Documents in Florida is subject to documentary
stamp tax unless the requirements as provided under s.
201.09(1), F.S., are met.

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 upon 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 from that
which is expressed in this response.

You are further advised that this response and your request
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.
Your name, address, and any other details that might lead to
identification of the taxpayer must be deleted by the Department
before disclosure. In an effort to protect the confidentiality
of such information, we request you notify the undersigned in
writing within 15 days of any deletions you wish made to the
request or the response.

Sincerely,

Charles T. Phillips
Senior Tax Specialist
Technical Assistance and Dispute Resolution
Office of General Counsel

CTP/mh

Enclosure

ATTACHMENT 1
EXHIBIT "B"

AFFIDAVIT

STATE OF ____
COUNTY OF ___

Before me this day personally appeared
________, who first being duly sworn, deposes and
says:

1. That he(she) is the __ (title) of XXX [or the
   name of its Affiliate] located in _(city),
   __(state), and as such has the authority and knowledge to
   give this Affidavit.

2. That attached hereto as Schedule A is a list of
   promissory notes which have been executed and delivered outside
   of the State of Florida to XXX [or the name of the Affiliate]
   located in, __(city), ___(state).

3. That some, but not all, of the promissory notes referred
   to in Schedule A together with related security documents are
   being transmitted to the offices of XXX located in XXX, Florida
   and will be held for safekeeping and servicing purposes in the
   State of Florida by XXX, on behalf of and for the benefit of XXX
   [or the name of its Affiliate] located in ___(city),
   _____(state).

4. That this Affidavit is being given for the purpose of
   evidencing that these promissory notes referred to in Schedule A
   are not subject to Florida documentary stamp taxes.

FURTHER AFFIANT SAYETH NOT.

Dated: _____

AFFIANT ______

The foregoing affidavit was sworn to and subscribed before
me this ___ day of __ by _, who is __
personally known to me or __ has produced his(her) ______
driver's license as identification.

____ Notary Public, State of __
Print Name: _____
My commission expires: __

EXHIBIT "B"

ATTACHMENT 2
EXHIBIT "C"

Language to be inserted into Promissory Note

The Maker hereby certifies that this Promissory Note, and
the other loan documents further evidencing, securing or
otherwise related to the indebtedness evidenced hereby, were
executed by the Maker in the State of __ and delivered
to the Payee in the State of __.

ATTACHMENT 3

EXHIBIT "E"

LENDER CERTIFICATION

Reference:
Borrower: ____
Promissory Note dated ____, in the principal
amount of $ _____.

The undersigned being a duly authorized officer of XXX [or
the name of the Affiliate] located in ____
("Lender"), hereby certifies that the promissory note and
related loan documents evidencing or securing the above
referenced loan have been executed by the Borrower, and
delivered by the Borrower to the Lender, in the State of
_______.

Lender:

XXX
[or the name of the Affiliate]

By: _____
Title: ________

Date: ___

ATTACHMENT 4

EXHIBIT "F"

BORROWER/LENDER CERTIFICATION

Reference: ____
Borrower: _____

Promissory Note dated ___, in the principal amount of
$_

The undersigned each hereby certify that the promissory note and
related loan documents evidencing or securing the above
referenced loan have been executed by the Borrower in the State
of ___, and delivered to XXX in the State of
__.

Borrower:

Lender:

By: ___
Title: ___
Date: _______

XXX

By: ____
Title: ___
Date: ______