QUESTION: Are certain trade documents obligations to pay money?
ANSWER: The trade documents are not obligations to pay money and are not subject to documentary stamp tax. Documentary stamp tax would be due if other documents are expressly incorporated into or with any of the documents executed or signed in Florida, such that, when the expressly incorporated documents are read together, contain an unconditional written promise to pay; a sum certain in money; and the signature of the borrower.
QUESTION: Is documentary stamp due on certain trade documents solely because the documents are executed in Florida.
ANSWER: Documentary stamp tax would not be due on the trade documents solely because they are executed in Florida. so long as the trade documents are not given as collateral security for a loan, and so long as there is no express incorporation of any of the trade documents executed or signed in Florida with any other documents, such that, when the expressly incorporated documents are read together, contain an unconditional written promise to pay; a sum certain in money; and the signature of the borrower.
July 31, 2020
Technical Assistance Advisement No. 20B4-002
Documentary Stamp Tax
Sections 201.08, Florida Statutes (F.S.)
XXXXX (“Taxpayer”)
Dear XXXXX:
This is in response to your request dated April 27, 2020, for a Technical Assistance Advisement (TAA) pursuant to s. 213.22, F.S., and Rule Chapter 12-11, Florida Administrative Code (F.A.C.), concerning the application of Florida’s documentary stamp tax, as imposed under sections 201.02(8), F.S., on certain documents that may be executed 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.
FACTS AS PRESENTED BY PRACTITIONER
The following documents were presented for examination.: XXXXX (the documents referred to in clause (i) through clause (vii) hereinabove, the “Trade Documents”), XXXXX
The Taxpayer’s business involves XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX.
You stated that XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX.
REQUESTED RULINGS
Issue 1
You requested that the Department confirm that the Trade Documents are not written obligations to pay money.
Issue 2
You requested that the Department confirm whether executing the Trade Documents in Florida would, in and of itself, subject XXXXX to Florida documentary stamp tax.
LAW AND DISCUSSION
Section 201.08(1)(a), F.S., provides that for promissory notes, nonnegotiable notes, written obligations to pay money, or assignments of salaries, wages, or other compensation made, executed, delivered, sold, transferred, or assigned in the state, and for each renewal of the same, the tax shall be 35 cents on each $100 or fraction thereof of the indebtedness or obligation evidenced thereby. The tax on any document described in this paragraph may not exceed $2,450. 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; Technical Assistance Advisement Page 3
- [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 [document]; and
- [document] and [document] constitute a single document.
Rule 12B-4.053(1), F.A.C., provides that the tax due under s. 201.08(1)(a), F.S., is on the “Promise to Pay” and each renewal thereof, and to be taxable the “note or other obligation” must be signed by the maker or obligor.
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, contain these elements:
1. An unconditional written promise to pay;
2. A sum certain in money; and
3. The signature of the borrower.
Rule 12B-4.053(27), F.A.C., provides that an assignment of a mortgage by a lender (mortgagee or owner of the asset) to a new lender who has purchased the note and mortgage and becomes the holder of the note and mortgage is not taxable. (State v. Sweat, 113 Fla. 797, 152 So. 432 (1934)). However, where the assignment of a mortgage is given as collateral security for a new loan, the assignment is taxable.
DEPARTMENT’S POSITION
This TAA is predicated on the understanding that in no case the documents presented for review are expressly incorporated one with another and that any other documents expressly incorporated therein, when considered together, do not provide for a change of the debt obligors or debt obligations in any form. The transactions contemplate XXXXX or other transactions between or among lenders without any change of obligors or to the obligations.
Documentary stamp tax applies to written obligations to pay money, and each renewal thereof, made, executed, delivered, sold, transferred, or assigned in Florida. Additionally, documentary stamp tax is due on mortgages, trust deeds, security agreements, or other evidences of indebtedness filed or recorded in this state, and each renewal of the same.
Issue 1
The Trade Documents do not contain the three elements noted on page 3 of this TAA and are not obligations to pay money. Therefore, documentary stamp tax would not be due on the Trade Documents. Documentary stamp tax would be due if other documents are expressly incorporated into or with any of the Trade Documents executed or signed in Florida, such that, when the expressly incorporated documents are read together, contain the three elements noted on page 3 of this TAA.
This ruling addresses only the taxability of the Trade Documents and the Department notes that Documentary stamp tax may be required on the XXXXX under s. 201.08(1)(a) and (b), F.S., if the XXXXX meets the statutory requirements of taxability.
Since the XXXXX provides for a security interest, the documentary stamp tax imposed under s. 201.08(1)(b), F.S., would be due if either the XXXX are filed or recorded in Florida. The tax would be due on the amount secured thereby, even if that amount is conditional.
Since the XXXXX discuss circumstances in which there may be a pledge of collateral, the documentary stamp tax imposed under s. 201.08(1)(b), F.S., would be due if a mortgage, security agreement, or other evidence of indebtedness is filed or recorded in this state to secure the payment of an obligation. The tax would be due on the amount secured thereby, even if that amount is conditional.
Issue 2
The Trade Documents were found not to be obligations to pay money. Documentary stamp tax would not be due on the XXXXX in Florida solely because of the execution, delivery and performance of any of the Trade Documents (regardless of where such Trade Documents was executed), so long as XXXXX are not given as collateral security for a loan, and so long as there is no express incorporation of any of the Trade Documents executed or signed in Florida with any other documents, such that, when read together contain the three elements addressed in this TAA.
This TAA does not address the taxability of the XXXXX.
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. 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.
Henry Small
Tax Law Specialist
Technical Assistance and Dispute Resolution
