TAA 21B4-002 Revolving Credit Agreement
QUESTION: Is a certain revolving credit agreement (the “Agreement”) and related documents subject to Florida’s documentary stamp tax pursuant to s. 201.08, F.S.?
ANSWER: Neither the Agreement, nor any of the related documents, contain an unconditional promise to pay a sum certain. The “promise to pay” found within the Agreement is contingent upon the borrower taking advances under the credit agreement. In addition, no other documents are expressly incorporated that would make the Agreement or the related documents taxable.
Since no mortgages or security agreements are being recorded in Florida, no tax is due under s. 201.08(1)(b), F.S.
February 17, 2021
Technical Assistance Advisement No. 21B4-002
Documentary Stamp Tax
Chapter 201, Florida Statutes (F.S.)
Dear XXX:
This is in response to your request dated September 23, 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 imposition of documentary stamp tax on a revolving credit agreement. 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 Petitioner
XXX (the “Taxpayer”) offers revolving credit facilities to Florida borrowers. Borrowers establish a line of credit with the Taxpayer by executing a Demand Revolving Credit Agreement and Disclosure (the “Agreement”), which was provided to the Department for review. The line of credit has a fixed credit limit, and it is generally secured by a pledge of investment accounts. No promissory note is executed, and no mortgage or security agreement is filed or recorded in Florida.
The Agreement contains the borrower’s promise to repay any and all amounts that may be advanced to the borrower.
Other documents are also executed by the borrower and the Taxpayer when establishing the line of credit. These include a Consumer Pledge Agreement; Pledge Asset Agreement for Collateral Loans; Form W-9 Request for Taxpayer Identification Number and Certification; USA Patriot Act; What Does (Taxpayer) Do with your Personal Information; State of Purpose for an Extension of Credit by Creditors – FR T-4; Errors and Omissions Agreement; Disbursement Request and Authorization; and Securities Account Control Agreement (collectively, the “Other Loan Documents”).
All of the relevant documents have been provided to the Department for review.
Request for Advisement
You request the Department’s opinion as to whether the Agreement or the Other Loan Documents are subject to Florida’s documentary stamp tax pursuant to s. 201.08, F.S.
Law and Discussion
Section 201.08(1)(a), F.S., provides that on 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 $0.35 cents on each $100.00 or fraction thereof of the indebtedness or obligation evidenced thereby. Under s. 201.08(6), F.S., the taxability of a document is to be determined solely from the four corners of that document and any other document expressly incorporated into such document.
Section 201.08(1)(b), F.S., provides, in part, that on mortgages, trust deeds, security agreements, or other evidences of indebtedness filed or recorded in this 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.
Rule 12B-4.054(4), F.A.C., provides that a written obligation to pay money which is not fixed and absolute at the time of execution is not subject to tax.
In order to be taxable under s. 201.08(1)(a), F.S., a written obligation to pay money, that is executed or delivered in Florida, 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:
1. An unconditional written promise to pay;
2. A sum certain in money; and
3. The signature of the borrower.
Position of the Department
Neither the Agreement, nor any of the Other Documents, contain an unconditional promise to pay a sum certain. The “promise to pay” found within the Agreement is contingent upon the borrower taking advances under the credit agreement. In addition, no other documents are expressly incorporated that would make the Agreement or Other Documents taxable. Since no mortgages or security agreements are being recorded in Florida, no tax is due under s. 201.08(1)(b), F.S.
Please be aware that any mortgage, lien, security agreement or other evidence of indebtedness filed or recorded in Florida and given to secure the reviewed documents may be subject to documentary stamp tax.
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.
Roger L. Beasley
Tax Law Specialist
Technical Assistance and Dispute Resolution
