Text of H.R. 7491_. CONTENTS Page 1 Agency response in support of H.R. 7491 and related bills: Board of Governors, Federal Reserve System, letter from Hon. J. L. ADDITIONAL INFORMATION SUBMITTED FOR THE RECORD Hansen, Hon. Orval, letter dated May 24, 1969- Letter with attachments, dated May 26, 1969__. Letter from Cleo F. Jaillet, commissioner of corporations and taxation, Commonwealth of Massachusetts, dated May 23, 1969.-. Telegram from Gov. Francis W. Sargent of Massachusetts, dated May Independent Bankers Association of America, letter dated May 21, 1969, Letters and telegrams received by committee from States supporting "The Preferential Tax and Venue Treatment Enjoyed by National National Association of Tax Administrators, letter dated May 23, 1969, with an attached resolution adopted by Midwestern States Association Pennsylvania Bankers Association, letter dated May 24, 1969, with an Supreme Court of the United States, decision of the case First Agricultural National Bank of Berkshire County v. State Tax Commission _ _ United States Code, excerpt from 12 § 548, national bank shares List of States showing estimates of amount lost annually--- (III) TESTIMONY RECEIVED IN CONSIDERATION OF H.R. 7491 AND RELATED BILLS MONDAY, MAY 26, 1969 HOUSE OF REPRESENTATIVES, COMMITTEE ON BANKING AND CURRENCY, (Text of H.R. 7491:) [H.R. 7491, 91st Cong., first sess.] Washington, D.C. A BILL To clarify the liability of national banks for certain taxes Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. A national bank has no immunity from any sales tax, use tax, or personal property tax which it would be required to pay if it were a bank chartered under the laws of the State or other jurisdiction within which its principal office is located. (The following agency reports on H.R. 7491 and related bills were received for inclusion in the record:) BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM, Hon. WRIGHT PATMAN, OFFICE OF THE VICE CHAIRMAN, Chairman, Committee on Banking and Currency, House of Representatives, Washington, D.C. DEAR MR. CHAIRMAN: This is in reply to your requests for the Board's views on H.R. 7491 and other bills to clarify the liability of national banks for certain State and local taxes. The Board endorses the amendment to section 5219 of the Revised Statutes as submitted to your Committee by the Treasury Department to accomplish that purpose. DEAR MR. CHAIRMAN: This letter responds to your requests for the views of the Federal Deposit Insurance Corporation with respect to H.R. 2182, H.R. 3826, H.R. 7491, and H.R. 8642, 91st Congress, bills designed to clarify the liability of national banks for certain taxes. The Corporation has consistently supported the principle of parity between State and national banks with respect to State and local taxation. Therefore we favor the objective of the bills. We understand that the Department of the Treasury has submitted to you substitute language which is designed to subject national banks to taxes imposed by the states in which their principal offices are located. Inasmuch as the Depart(1) ment of the Treasury substitute bill represents a step in the direction of a greater degree of parity than at present with respect to taxation of State and national banks, we support its early enactment. The Bureau of the Budget has advised that, from the standpoint of the Administration's program, there is no objection to the submission of this letter for consideration by your committee. Sincerely, Hon. WRIGHT PATMAN, K. A. RANDALL, Chairman. MAY 22, 1969. Chairman, Committee on Banking and Currency, House of Representatives, Washington, D.C. DEAR MR. CHAIRMAN: Reference is made to your requests for the views of this Department on H.R. 3826, H.R. 7491, H.R. 2182 and H.R. 8642, bills relating to the liability of national banks for certain taxes. H.R. 3826 and H.R. 7491, identical bills, would provide that a national bank has no immunity from any sales tax, use tax, or personal property tax which it would be required to pay if it were a bank chartered under the laws of the State or other jurisdiction within which its principal office is located. The bill, H.R. 2182, would provide that a national bank has no immunity from any sales tax, use tax and taxes and fees on motor vehicles. The bill, H.R. 8642, would provide that a national bank, as such, has no exemption from State taxation. The proposed legislation is apparently designed to overcome the effects of the decisions of the Supreme Court in the case of First Agricultural National Bank of Berkshire County v. State Tax Commission, 392 U.S. 339 (1968) and Dickinson v. First National Bank of Homestead, 37 Law Week 3262 (1969). The Supreme Court in the First Agricultural case held that national banks in Massachusetts did not have to pay State sales and use taxes because these methods of taxation were not included in section 5219 of the Revised Statutes (12 U.S.C. 548) which enumerates the ways in which States can tax national banks. The Dickinson case made a similar ruling involving Florida documentary stamp taxes. The Supreme Court held that section 5219 of the Revised Statutes was the exclusive source of authority for the taxation of national banks by States. The Department believes that a national bank should be subject to the same taxation in its home State as a State chartered bank in that State, and that the decision of the Supreme Court to the contrary in the First Agricultural case should be overcome by legislation. Consequently, the Department is in favor of the objective of the bills. However, the First Agricultural case dealt only with the question of taxation by the home State. That case did not involve the broader question of taxation and regulation by other States in which a national bank may do business. This so-called "doing business" question raises different issues from that involved in the sales tax controversy. The question of taxation of foreign corporations, including banks, is interwoven with other complex issues, such as venue for suit, and necessity for compliance with "doing business" statutes. We recommend therefore, that the question of taxation of national banks by States other than the home State, be considered and treated separately. We perceive no reason, however, why the specific problem raised by the First Agricultural case may not be taken care of immediately. We recommend, therefore, that language along the lines of the following be adopted as a substitute for the language of the above bills: "That section 5219 of the Revised Statutes, as amended (12 U.S.C. 548), is further amended by adding the following new paragraph at the end thereof: "5. In addition to the other methods of taxation permitted herein, a State or political subdivision thereof may impose sales and use taxes on a national bank having its principal office within such State in the same manner and to the same extent as such taxes are imposed upon a State chartered bank having its principal office within such State." The foregoing language covers only sales and use taxes which were involved in the First Agricultural case. If the Congress believes that it is desirable to add other taxes listed in the bills, the language could be changed accordingly. The Department has been advised by the Bureau of the Budget that there is no objection from the standpoint of the Administration's program to the submission of this report to your Committee. |