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House Bill 1337er

ENROLLED 1997 Legislature HB 1337, First Engrossed 1 2 An act relating to taxation; amending s. 3 199.143, F.S.; defining "residence" for 4 purposes of provisions which specify when the 5 nonrecurring intangible personal property tax 6 is paid when the property subject to the 7 mortgage, deed of trust, or other lien which 8 secures a line of credit is the borrower's 9 residence; amending s. 201.08, F.S., which 10 imposes the excise tax on documents on notes 11 and other obligations to pay money, and 12 mortgages and other evidences of indebtedness; 13 specifying the conditions under which a renewal 14 of a document is taxable under said section; 15 providing that taxability of a document shall 16 be determined solely from the face of the 17 document and separate documents expressly 18 incorporated therein; specifying application of 19 tax when multiple documents secure the same 20 primary debt; providing that no tax imposed 21 before the effective date of this act and not 22 actually collected on certain documents 23 exempted by this act shall be due with respect 24 to such documents; specifying status of 25 mortgages given by a taxpayer other than or in 26 addition to the taxpayer obligated on the 27 primary obligation or given to secure a 28 guaranty or surety on a primary note; amending 29 s. 201.09, F.S.; specifying conditions under 30 which a renewal note evidencing a revolving 31 obligation is exempt from said tax; creating s. 1 CODING: Words stricken are deletions; words underlined are additions. ENROLLED 1997 Legislature HB 1337, First Engrossed 1 201.091, F.S.; providing that if a document is 2 not qualified for exemption as a renewal solely 3 because of nonpayment of tax on a prior 4 document, payment of the deficiency, interest, 5 and any penalty shall allow the document to 6 qualify for exemption; providing for 7 administration; providing an effective date. 8 9 Be It Enacted by the Legislature of the State of Florida: 10 11 Section 1. Section 199.143, Florida Statutes, is 12 amended to read: 13 199.143 Future advances.-- 14 (1) Except as provided in subsection (3), if the 15 mortgage, deed of trust, or other lien is recorded or executed 16 after December 31, 1985, and secures a line of credit or 17 otherwise secures future advances, as provided in s. 697.04, 18 the nonrecurring tax shall initially be paid on the initial 19 obligation secured, excluding future advances. Each time an 20 additional amount is borrowed or a future advance is made, 21 additional nonrecurring tax shall be paid on the amount of the 22 advance. However, any increase in the amount of original 23 indebtedness caused by interest accruing under an adjustable 24 interest rate obligation having an initial interest rate 25 adjustment interval of not less than 6 months shall be taxable 26 as a future advance only to the extent such increase is a 27 computable sum certain when the original indebtedness is 28 incurred. 29 (2) The trustee, if a deed of trust, or the owner of 30 the obligation, if a mortgage or other lien, making the 31 advance shall pay the additional tax to the clerk to whom the 2 CODING: Words stricken are deletions; words underlined are additions. ENROLLED 1997 Legislature HB 1337, First Engrossed 1 initial tax was paid. The clerk shall note the amount 2 received upon the instrument, if one has been recorded, or 3 shall otherwise give a receipt. 4 (3) If the property subject to the mortgage, deed of 5 trust, or other lien which secures a line of credit is a 6 residence of the borrower at the time the mortgage, deed of 7 trust, or other lien is created, then the nonrecurring tax 8 shall be paid as provided in s. 199.135 on the maximum amount 9 of the line of credit and no further nonrecurring tax shall be 10 due on any borrowing under the line of credit. As used in 11 this subsection, "residence" includes only a dwelling unit 12 that is a primary, secondary, or vacation home of the 13 borrower, who is a natural person, and that has been primarily 14 occupied for residential or recreational purposes at any time 15 during the immediately preceding 1-year period by the borrower 16 or by the borrower's spouse or children. The term excludes 17 any dwelling that is used primarily as a rental unit. Use by 18 a member of the borrower's immediate family for consideration 19 is deemed rental of the dwelling unit. Notwithstanding the 20 fact that title to a dwelling unit is held by a trustee, the 21 dwelling unit shall be considered a residence of the borrower 22 and may be used as security for a line of credit under this 23 subsection, as long as the dwelling unit is a residence of the 24 borrower, as defined in this subsection. 25 Section 2. (1) Subsections (5), (6), and (7) are 26 added to section 201.08, Florida Statutes, 1996 Supplement, to 27 read: 28 201.08 Tax on promissory or nonnegotiable notes, 29 written obligations to pay money, or assignments of wages or 30 other compensation; exception.-- 31 3 CODING: Words stricken are deletions; words underlined are additions. ENROLLED 1997 Legislature HB 1337, First Engrossed 1 (5) For purposes of this section, a renewal shall only 2 include modifications of an original document which change the 3 terms of the indebtedness evidenced by the original document 4 by adding one or more obligors, increasing the principal 5 balance, or changing the interest rate, maturity date, or 6 payment terms. Modifications to documents which do not modify 7 the terms of the indebtedness evidenced such as those given or 8 recorded to correct error; modify covenants, conditions, or 9 terms unrelated to the debt; sever a lien into separate liens; 10 provide for additional, substitute, or further security for 11 the indebtedness; consolidate indebtedness or collateral; add, 12 change, or delete guarantors; or which substitute a new 13 mortgagee or payee are not renewals and are not subject to tax 14 pursuant to this section. If the taxable amount of a mortgage 15 is limited by language contained in the mortgage or by the 16 application of rules limiting the tax base when there is 17 collateral in more than one state, then a modification which 18 changes such limitation or tax base shall be taxable only to 19 the extent of any increase in the limitation or tax base 20 attributable to such modification. This subsection shall not 21 be interpreted to exempt from taxation an original mortgage 22 which would otherwise be subject to tax pursuant to subsection 23 (1). 24 (6) Taxability of a document pursuant to this section 25 shall be determined solely from the face of the document and 26 any separate document expressly incorporated into the 27 document. Taxability of a document pursuant to this section 28 shall not be determined by reference to any separate document 29 referenced or forming part of the same contract or obligation 30 unless the separate document is expressly incorporated into 31 the document. When multiple documents evidence, secure, or 4 CODING: Words stricken are deletions; words underlined are additions. ENROLLED 1997 Legislature HB 1337, First Engrossed 1 form part of the same primary debt, tax pursuant to this 2 section shall not be imposed more than once, on the total 3 indebtedness evidenced, notwithstanding the existence of 4 multiple documents. 5 (7) A mortgage, trust deed, or security agreement 6 filed or recorded in this state which is given by a taxpayer 7 different than or in addition to the taxpayer obligated upon 8 the primary note, certificate of indebtedness, or obligation, 9 or which is given to secure a guaranty or surety of a primary 10 note, certificate of indebtedness, or obligation, shall for 11 purposes of this section be deemed to evidence and secure the 12 primary note, certificate of indebtedness, or obligation, not 13 a separate obligation, and to the extent that tax is paid on 14 any document evidencing or securing the primary note, 15 certificate of indebtedness, or obligation, such tax shall be 16 paid once, notwithstanding that more than one mortgage, trust 17 deed, or security agreement is recorded with respect to such 18 note, certificate of indebtedness, or obligation. 19 (2) No tax imposed by s. 201.08, Florida Statutes, 20 before July 1, 1997, and not actually collected on documents 21 exempted by or otherwise not subject to tax pursuant to s. 22 201.08(6), Florida Statutes, as created by this act, shall be 23 due from any person with respect to such documents. 24 Section 3. Subsection (1) of section 201.09, Florida 25 Statutes, 1996 Supplement, as amended by chapter 96-395, Laws 26 of Florida, is amended to read: 27 201.09 Renewal of existing promissory notes and 28 mortgages; exemption.-- 29 (1) When any promissory note is given in renewal of 30 any existing promissory note, which renewal note only extends 31 or continues the identical contractual obligations of the 5 CODING: Words stricken are deletions; words underlined are additions. ENROLLED 1997 Legislature HB 1337, First Engrossed 1 original promissory note and evidences part or all of the 2 original indebtedness evidenced thereby, not including any 3 accumulated interest thereon and without enlargement in any 4 way of the original contract and obligation, such renewal note 5 shall not be subject to taxation under this chapter if such 6 renewal note has attached to it the original promissory note 7 with the proper notation thereon as required by s. 201.133. 8 In order to be exempt from taxation under this section, a 9 renewal note evidencing a term obligation shall not be 10 executed by any person other than the original obligor and 11 must renew and extend only the unpaid balance of the original 12 contract and obligation. In order to be exempt from taxation 13 under this section, a renewal note evidencing a revolving 14 obligation shall not be executed by any person other than the 15 original obligor and must renew and extend no more than the 16 original face amount of the original contract and obligation. 17 Section 4. Section 201.091, Florida Statutes, is 18 created to read: 19 201.091 Correction of prior error.--If the only reason 20 a document is not exempt from tax pursuant to s. 201.09 is the 21 nonpayment or underpayment of tax on the document evidencing 22 the original contract and obligation or the original primary 23 debt or mortgage, then payment of the tax deficiency plus 24 interest at the current statutory rate and penalty, if any, on 25 the prior document shall cause the renewal to qualify for the 26 exemption. The corrective payment described in this section 27 may be made on the original note, on the original mortgage, on 28 any subsequent mortgage modification, or in such other manner 29 as may be set forth in rules promulgated by the Department of 30 Revenue. The application of this section shall not be limited 31 6 CODING: Words stricken are deletions; words underlined are additions. ENROLLED 1997 Legislature HB 1337, First Engrossed 1 by expiration of any applicable statute of limitations on 2 assessment or collection of the omitted tax. 3 Section 5. This act shall take effect July 1, 1997. 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 7