Under Florida
revenue laws, a document tax is imposed on loan transactions that are made,
signed, executed, issued, or transacted in the State. The Florida Department of Revenue has ruled
that pension and 401(k) plan loans are subject to the tax.
Section 201.08(1), F.S., imposes documentary stamp tax on
written obligations to pay money that are made, executed, or delivered in Florida , including
promissory notes made in connection with pension plan loans, 401K plan loans,
and share loans. To constitute a taxable written obligation to pay money, the
document must contain an unconditional written obligation to pay a sum certain
in money and be signed by the obligor.
To be taxable, the written obligation must be fixed and
absolute at the time of execution. The tax rate on written obligations to pay
money is $.35 for each $100, or fraction thereof, of the obligation evidenced
by the document.
The law further provides that no state court may enforce the
provisions of a promissory note if the document tax is not paid.
A failure to pay the tax could mean that a 401(k) plan is
making loans that are not adequately secured, creating the {possibilities} for
both prohibited transaction issues and operational failure issues.
The Florida statute reaches not only plan loans made to
participants who are Florida residents but to plans with sponsors resident in
Florida or third party administrators resident in Florida.
The Florida
law contemplates a procedure for paying past due taxes.
No other state currently appears to have a loan tax
