Tax Type
Recordation Tax
Description
Federally chartered corporation; Exemption
Topic
Exemptions
Date Issued
08-29-1990
August 29, 1990
Re: Ruling Request: Recordation Tax
§58.1-811 Exemptions
20 U.S.C. 1087-2(b)(2)
Dear ****
This is in response to your letter of July 9, 1990, in which you requested a ruling that the taxpayer is exempt from the payment of any recordation taxes on deeds of trusts or mortgages.
The taxpayer is a federally chartered corporation created by Congress in 1972. It has been granted a broad statutory exemption from certain taxes imposed by any state, county or local taxing authority by Congress:
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- The [taxpayer], including its franchise, capital, reserves, surplus, mortgages, or other security holdings and income shall be exempt from all taxation now or hereafter imposed by any State, territory, possession, Commonwealth, or dependency of the United States, or by the District of Columbia, or by any county, municipality, or local taxing authority, except that any real property of the Association shall be subject to State, territorial, county, municipal, or local taxation to the same extent according to its value as other real property is taxed. 20 U.S.C. §1087-2(b)(2).
A recent opinion of the Attorney General confirmed an earlier ruling that a federal exemption prevails over a conflicting state statute which may be read to authorize the imposition of recordation taxes. (opinion of the Attorney General, February 20, 1990, citing 1987-1988 Att'y Gen. Ann. Rep. 504, copy enclosed). The taxpayer has been provided a federal exemption from all state and local taxation, with the exception of real property taxes. The recordation tax is not a property tax but a tax on the privilege of using the state's registration laws. Because the recordation tax falls within the federal exemption granted the taxpayer, the state and local taxing authorities are prohibited from imposing the tax.
Accordingly, the taxpayer is exempt from any recordation tax imposed under Va. Code §58.1-800 et seq. Therefore, a deed of trust or mortgage naming the taxpayer as the beneficiary may be recorded free of tax.
You should note that under Va. Code §17-59 (copy enclosed) you must clearly state on the face of the instrument to be recorded that it is exempt under 20 U.S.C. §1087-2(b)(2).
Sincerely,
W. H. Forst
Tax Commissioner
Rulings of the Tax Commissioner