The Supreme Court of the United States concluded that 11 U.S.C. Section 1146(a) affords a stamp-tax exemption only to transfers made pursuant to a Chapter 11 bankruptcy plan that has been confirmed under 11 U.S.C. Section 1129 (Florida Department of ...

 

DEPARTMENT OF REVENUE
Miscellaneous Tax

RULE NOS.:RULE TITLES:
12B-4.013Conveyances Subject to Tax
12B-4.014Conveyances Not Subject to Tax
12B-4.054Exempt Transactions
PURPOSE AND EFFECT: The Supreme Court of the United States concluded that 11 U.S.C. Section 1146(a) affords a stamp-tax exemption only to transfers made pursuant to a Chapter 11 bankruptcy plan that has been confirmed under 11 U.S.C. Section 1129 (Florida Department of Revenue v. Piccadilly Cafeterias, Inc., 554 U.S. 33 (2008)).
The purpose of the proposed amendments to Rule Chapter 12B-4, F.A.C. (Documentary Stamp Tax), is to clarify the application of documentary stamp tax to the issuance, transfer, or exchange of a security, or the making or delivery of an instrument of transfer pursuant to Section 1146(a) under a bankruptcy plan confirmed under 11 U.S.C. Section 1129.
SUMMARY: The proposed amendments to Rule 12B-4.013, F.A.C. (Conveyances Subject to Tax), and Rule 12B-4.014, F.A.C. (Conveyances Not Subject to Tax), clarify that a document that transfers Florida real property pursuant to a bankruptcy plan under 11 U.S.C. Section 1129 after the bankruptcy plan has been confirmed is not subject to documentary stamp tax and that transfers prior to confirmation of the plan are subject to tax.
The proposed amendments to Rule 12B-4.054, F.A.C. (Exempt Transactions), clarify that a promissory note or other written obligation to pay money, bond, mortgage, trust deed, security agreement, or other evidence of indebtedness filed or recorded in Florida issued pursuant to a bankruptcy plan under 11 U.S.C. Section 1129 after the plan has been confirmed is not subject to documentary stamp tax.
SUMMARY OF STATEMENT OF ESTIMATED REGULATORY COSTS AND LEGISLATIVE RATIFICATION:
The Agency has determined that this will not have an adverse impact on small business or likely increase directly or indirectly regulatory costs in excess of $200,000 in the aggregate within one year after the implementation of the rule. A SERC has not been prepared by the agency.
The Agency has determined that the proposed rule is not expected to require legislative ratification based on the statement of estimated regulatory costs or if no SERC is required, the information expressly relied upon and described herein: 1) no requirement for the Statement of Economic Regulatory Costs (SERC) was triggered under Section 120.541(1), F.S.; and 2) based on past experiences with activities for providing clarification of the taxability of documents transferring an interest in real property prior to and after confirmation of bankruptcy, the adverse impact or regulatory cost, if any, do not exceed nor would exceed any one of the economic analysis criteria in a SERC, as set forth in Section 120.541(2)(a), F.S.
Any person who wishes to provide information regarding a statement of estimated regulatory costs, or provide a proposal for a lower cost regulatory alternative must do so in writing within 21 days of this notice.
RULEMAKING AUTHORITY: 201.11, 213.06(1) FS.
LAW IMPLEMENTED: 201.01, 201.02, 201.08, 201.09, 201.10, 201.11, 201.21, 201.22, 201.23, 201.24, 517.32 FS.
IF REQUESTED WITHIN 21 DAYS OF THE DATE OF THIS NOTICE, A HEARING WILL BE HELD AT THE DATE, TIME AND PLACE SHOWN BELOW (IF NOT REQUESTED, THIS HEARING WILL NOT BE HELD):
DATE AND TIME: May 21, 2013, 10:00 a.m.
PLACE: 2450 Shumard Oak Boulevard, Building One, Room 1220, Tallahassee, Florida
Pursuant to the provisions of the Americans with Disabilities Act, any person requiring special accommodations to participate in this workshop/meeting is asked to advise the agency at least 48 hours before the workshop/meeting by contacting: Tammy Miller at [phone]. If you are hearing or speech impaired, please contact the agency using the Florida Relay Service, 1(800)955-8771 (TDD) or 1(800)955-8770 (Voice).
THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULE IS: Tim Phillips, Revenue Program Administrator, Technical Assistance and Dispute Resolution, Department of Revenue, P.O. Box 7443, Tallahassee, Florida 32314-7443, telephone [phone].

THE FULL TEXT OF THE PROPOSED RULE IS:

12B-4.013 Conveyances Subject to Tax.

(1) through (18) No change.

(19) Transfer in Bankruptcy: Sale of real property by trustees, debtors, or receivers in federal bankruptcy proceedings is subject to tax unless the transfer is made pursuant to a plan confirmed under Section 1129 of the Bankruptcy Code, is a precondition or is essential to the confirmation of the plan, or is necessary to consummate or implement a confirmed plan. The debtor must be a party to the transfer. If the bankruptcy court does not ultimately confirm the plan under 11 U.S.C. Section 1129, the transfer would not be exempt pursuant to 11 U.S.C. Section 1146(c), and would be subject to tax. (1932 Op. Att’y. Gen. Fla. 1931 Biennial Report, Page 1039 (Sept. 14, 1932)) (11 U.S.C. Section 1146(c); In re Jacoby-Bender, Inc., 758 F.2d 840 (2d Cir. 1985); In re Smoss Enterprises Corp., 54 Bankr. 950 (E.D.N.Y. 1985)).

Cross Reference – subsections 12B-4.014(15), 12B-4.054(30), F.A.C.

(20) through (29) renumbered (19) through (28) No change.

Rulemaking Authority 201.11, 213.06(1) FS. Law Implemented 201.01, 201.02 FS. History–Revised 8-18-73, Formerly 12A-4.13, Amended 12-11-74, 2-21-77, 5-23-77, 12-26-77, 7-3-79, 9-16-79, 11-29-79, 3-27-80, 12-23-80, 12-30-82, Formerly 12B-4.13, Amended 12-5-89, 6-4-90, 2-13-91, 2-16-93, 10-18-94, 12-30-97, 7-28-98, 1-4-01, 5-4-03, 4-5-07,_________.

 

12B-4.014 Conveyances Not Subject to Tax.

(1) through (14) No change.

(15) Confirmed Transfer in Bankruptcy Plan: A document that transfers an interest in Florida Sale of real property by trustees, debtors or receivers in federal bankruptcy proceedings is subject to tax unless the transfer is made pursuant to a Chapter 11 plan that was confirmed under Section s. 1129 of the Bankruptcy Code, (Title 11 U.S.C.) prior to the date of is a precondition or essential to the confirmation of the plan, or is necessary to consummate or implement a confirmed plan and the debtor is a party to the transfer is not taxable. A document that transfers Florida real property prior to confirmation of the bankruptcy plan is subject to tax. If the bankruptcy court does not ultimately confirm the plan under 11 U.S.C. § 1129, the transfer would not be exempt pursuant to 11 U.S.C. § 1146(c), and would be subject to tax. (11 U.S.C. Section §1146(a)(c); Florida Department of Revenue v. Piccadilly Cafeterias, Inc., 554 U.S. 33 (2008)). In re Jacoby-Bender, Inc., 758 F.2d 840 (2d Cir. 1985); In re Smoss Enterprises Corp., 54 Bankr. 950 (E.D.N.Y. 1985)).

Rulemaking Authority 201.11, 213.06(1) FS. Law Implemented 201.01, 201.02 FS. History–Revised 8-18-73, Formerly 12A-4.14, Amended 2-21-77, 12-26-77, 12-23-80, Formerly 12B-4.14, Amended 12-5-89, 6-4-90, 2-13-91, 2-16-93, 10-18-94, 12-30-97, 1-4-01, 4-14-09,_________.

 

12B-4.054 Exempt Transactions.

(1) through (29) No change.

(30) Confirmed Bankruptcy Plan: A Under 11 U.S.C. 1146(c), the issuance, transfer, or exchange of a promissory note, bond or other written obligation to pay for the payment of money, bond, or the making, delivery or recordation of a mortgage, trust deed, security agreement or other evidence of indebtedness filed or recorded in Florida issued, is exempt from the documentary stamp tax if it is done pursuant to a Chapter 11 plan which was confirmed by the federal bankruptcy court under 11 U.S.C. Section 1129 of the Bankruptcy Code (Title 11 U.S.C.), prior to the date of the issuance is not taxable, is a precondition or essential to the confirmation of the plan, or is necessary to consummate or implement a confirmed plan and the debtor is a party to the transaction. If the bankruptcy court does not ultimately confirm the plan under 11 U.S.C. 1129, the transfer would not be exempt pursuant to 11 U.S.C. 1146(c), and would be subject to tax. (In re Baldwin League of Independent Schools, 110 Bankr. 125 (S.D.N.Y. 1990)). However, the bankruptcy exemption under (11 U.S.C. Section 1146(a)(c); Florida Department of Revenue v. Piccadilly Cafeterias, Inc., 554 U.S. 33 (2008)). does not apply to a mortgage or trust deed given to a third-party lender by a non-debtor purchaser of real property from a seller in bankruptcy, even if the sale is pursuant to a confirmed plan. (In re Eastmet Corporation, 907 F. 2d 1487 (4th Cir. 1990))

Cross Reference – subsections 12B-4.013(22) and 12B-4.014(15), F.A.C.

Rulemaking Authority 201.11, 213.06(1) FS. Law Implemented 201.01, 201.08, 201.09, 201.10, 201.11, 201.21, 201.22, 201.23, 201.24, 517.32 FS. History–Revised 8-18-73, Formerly 12A-4.54, Amended 2-21-77, 11-29-79, 3-5-80, 4-11-80, 7-27-80, 12-23-80, 2-12-81, Formerly 12B-4.54, Amended 3-30-81, 12-3-81, 12-29-86, 12-5-89, 2-13-91, 10-18-94, 12-30-97, 7-28-98, 1-4-01, 5-4-03,_________ .

NAME OF PERSON ORIGINATING PROPOSED RULE: Tim Phillips, Revenue Program Administrator, Technical Assistance and Dispute Resolution, Department of Revenue, P.O. Box 7443, Tallahassee, Florida 32314-7443, telephone [phone]
NAME OF AGENCY HEAD WHO APPROVED THE PROPOSED RULE: Governor and Cabinet
DATE PROPOSED RULE APPROVED BY AGENCY HEAD: April 2, 2013
DATE NOTICE OF PROPOSED RULE DEVELOPMENT PUBLISHED IN FAR: A Notice of Proposed Rule Development was published in the Florida Administrative Weekly on July 20, 2012 (Vol. 38, No. 29, p. 2906), to advise the public of the proposed changes to Rule Chapter 12B-4, F.A.C. (Documentary Stamp Tax), and to provide that, if requested in writing, a rule development workshop would be held on August 8, 2012. No request was received by the Department. No written comments were received by the Department.