FDIC Law, Regulations, Related Acts
5000 - Statements of Policy
FDIC STATEMENT OF POLICY REGARDING THE PAYMENT OF STATE AND LOCAL PROPERTY TAXES
After considering (1) the powers granted to it under the Constitution and federal law, (2) its obligation to maximize recoveries from the disposition of financial institutions and their assets, and (3) the potential effect of its actions upon state and local tax administration, the Federal Deposit Insurance Corporation (the "FDIC") has issued the following policy statement to provide guidance as to how it will administer its statutory responsibilities in this area.
This Statement of Policy is issued pursuant to the FDIC's powers and authorities granted by the Federal Deposition Insurance Act ("FDIA"), 12 U.S.C. §§ 1811, et seq., and in particular section 15 of the FDIA, 12 U.S.C. § 1825.
B. Scope and Applicability
This policy statement supersedes the Statements of Policy issued by the FDIC and the Resolution Trust Corporation ("RTC") in 1991. It generally applies to the Corporation when it is liquidating assets of an insured depository institution in its corporate or receivership capacities (the "Corporation"). It applies to any tax, penalty, interest, or other related charge imposed or sought to be imposed on property to whose ownership the FDIC succeeds in such capacities.
Payment of Taxes: The Corporation will pay its proper tax obligations when they come due. Furthermore, the Corporation will pay claims for delinquencies as promptly as is consistent with sound business practice and the orderly administration of the insured depository institution's affairs. The Corporation may decline to pay property taxes, including delinquency charges or other claims, in situations where abandonment of its interest in the property is appropriate.
Owned Real Property: Owned real property of the Corporation is subject to state and local real property taxes, if those taxes are assessed according to the property's value. The Corporation is immune from real property taxes assessed on other bases.
Secured Interests in Real Property: Real property which is subject to a security or lien interest in favor of the FDIC is subject to ad valorem taxes and taxes assessed on other bases.
Personal Property: The Corporation is immune from all forms of taxation on personal property.
Other Related Taxes: The Corporation is immune from taxes other than ad valorem real property taxes. Taxes on sales, transfers, or other dispositions of Corporation property are generally in the nature of excise taxes which are levied on the transaction and not on the property (although the calculation of the amount of tax may be based on the property's sale price); the Corporation is immune from such taxes.
D. Interest and Penalties
Interest: The Corporation will pay interest for periods before and during FDIC ownership on delinquent taxes properly owed at the rate provided under state law but only to the extent the interest payment obligation is secured by a valid lien. The Corporation will generally follow a state's own characterization as to whether a delinquency charge constitutes a penalty, but will reserve its right to challenge any charge (or portion thereof) called interest that is demonstrably a penalty.
Penalties: The Corporation is not liable for any amounts in the nature of fines or penalties. The Corporation will not pay, or recognize liens for, such amounts. The Corporation will not pay attorneys' fees or other similar costs that may be imposed under state law in connection with the resolution of tax disputes.
E. Tax Liens
General Principles: If any ad valorem real property taxes (including interest) on Corporation owned property are secured by a valid lien (in effect before the property became owned by the Corporation), the Corporation will pay those claims. With respect to property not owned by the Corporation, but in which the Corporation has a lien interest, any ad valorem real property taxes (including interest) will be paid so long as they are secured by a valid lien with priority over the Corporation's lien interest. Any taxes other than ad valorem real property taxes which are secured by a valid lien in effect before the Corporation acquired an interest in the property, and which have priority under state law over any lien interest of the Corporation, will be paid. However, if abandonment of its interest in the property is appropriate, the Corporation may elect not to pay such claims.
Foreclosure: No property of the Corporation is subject to levy, attachment, garnishment, foreclosure, or sale without the Corporation's consent. Furthermore, a lien for taxes and interest may attach to property in which the Corporation has a lien or security interest, but the Corporation will not permit a lien or security interest held by it to be eliminated by foreclosure without the Corporation's consent.
Sale of Tax Liens: In cases in which a tax lien has been sold to a private party under state law, if (1) the sale takes place before the Corporation obtains a fee interest in the property, or if the Corporation has a lien interest in the property and the tax lien has priority over the Corporation's lien, and (2) the Corporation desires to eliminate the tax lien purchaser's interest, the Corporation will pay the amount required by state law to satisfy such interest (other than any fees or penalties specifically imposed to redeem such interest). If the tax lien does not have priority, the Corporation will take whatever action is necessary to ensure that its own interest is satisfied first. If the Corporation has a fee interest, the sale must protect the Corporation's interest.
Liens for Undetermined Amounts: The Corporation generally will not pay non ad valorem taxes, including special assessments, on property in which it has a fee interest unless the amount of tax is fixed at the time that the Corporation acquires its fee interest in the property, nor will it recognize the validity of any lien to the extent it purports to secure the payment of any such amounts. With respect to property in California now owned by the Corporation that was owned by the RTC on December 31, 1995, or that became property of the Corporation through foreclosure of a security interest held by the RTC on that date, the Corporation will continue the RTC practice of paying special taxes imposed pursuant to the Mello-Roos Community Facilities Act of 1982 if the taxes were imposed prior to the RTC's acquisition of an interest in the property.
F. Challenges to Assessments
The Corporation is only liable for state and local taxes which are based on the value of the property during the period for which the tax is imposed, notwithstanding the failure of any person, including prior record owners, to challenge an assessment under the procedures available under state law. In the exercise of its business judgment, the Corporation may challenge assessments which do not conform with the statutory provisions, and during the challenge may pay tax claims based on the assessment level deemed appropriate, provided such payment will not prejudice the challenge. The Corporation will generally limit challenges to the current and immediately preceding taxable year and to the pursuit of previously filed tax protests. However, the Corporation may, in the exercise of its business judgment, challenge any prior taxes and assessments provided that (1) the Corporation's records (including appraisals, offers or bids received for the purchase of the property, etc.) indicate that the assessed value is clearly excessive, (2) a successful challenge will result in a substantial savings to the Corporation, (3) the challenge will not unduly delay the sale of the property, and (4) there is a reasonable likelihood of a successful challenge.
G. Dispute and Notification Procedures
Disputes: The Corporation will attempt to advise taxing authorities of its statutory rights and resolve all tax disputes as taxes become due. In order to dispose of property subject to disputed tax claims, the Corporation may, as business judgment dictates, enter into agreements with taxing authorities, title companies, or prospective purchasers which provide for the disputed amounts to be held in escrow. When the closing of a transaction is threatened because of the disputed tax amounts, the Corporation may, as business judgment dictates, elect to pay the disputed tax claims under protest. In all such cases the Corporation shall reserve its legal rights to a refund of such disputed amounts and may pursue, through litigation if necessary, a reimbursement of the disputed amounts and any attendant costs, expenses and interest.
Notification: The Corporation will attempt to notify state and local taxing authorities of the existence of an interest in property which the Corporation believes to be within the authority's jurisdiction.
H. Subsidiaries, Bridge Banks and Conservatorships
For the present, the Corporation will not assert section 15 tax immunity for bridge banks, special asset pools covered by assistance transactions where the Corporation does not retain ownership, or conservatorships. However, a bridge bank, conservatorship of a newly-formed institution, or an assisted acquirer is not liable for any obligations not specifically assumed from a receiver (as in a "pass-through receivership"). In this situation, the acquiring institution may not be liable for any penalties that continue to accrue after the establishment of the de novo institution.
Additionally, for the present, the Corporation has determined generally not to assert section 15 tax immunity on behalf of state-chartered corporations, the stock of which is wholly or partially owned by the Corporation acting in any of its capacities.
By order of the Board of Directors. Dated at Washington, D.C., this 26th day of November 1996.
[Source: 61 Fed. Reg. 65057, December 10, 1996, effective January 9, 1997]