Tax Type
Recordation Tax
Description
Deed of Trust
Topic
Documents Subject to Tax
Date Issued
02-20-1990
[Opinion - Virginia Attorney General: 1990 at 259]
REQUEST BY: The Honorable David A. Bell Clerk, Circuit Court of Arlington County 1400 North Courthouse Road, Room 400 Arlington, Virginia 22201
OPINION BY: Mary Sue Terry, Attorney General
OPINION:
You ask whether a particular deed of trust is subject to the recordation tax imposed by § 58.1-803 of the Code of Virginia. The beneficiary of the deed of trust that is the subject of your inquiry1 is the National Consumer Cooperative Bank.
I. Applicable Statutes
Section 58.1-812 provides that "except as otherwise provided in this chapter [Chapter 8 of Title 58.1], no . . . deed of trust . . . shall be admitted to record without the payment of the tax imposed thereon by law." § 58.1-803 imposes a recordation tax on deeds of trust. § 58.1-811 grants certain exemptions from the tax, none of which applies to the deed of trust you present for review.
The National Consumer Cooperative Bank (the "Bank") was established by the National Consumer Cooperative Bank Act, 12 U.S.C.A. §§ 3001-3051 (West 1989) (the "Act"). The Act authorizes the Bank to make loans to certain eligible corporations. See 12 U.S.C.A. § 3018. § 3019(a) further provides:
The Bank, including its franchise, capital, reserves, surplus, mortgages, or other security holdings and income shall be exempt from taxation now or hereafter imposed by any State, county, municipality, or local taxing authority, but any real property held by the Bank shall be subject to any State, county, municipal, or local taxation to the same extent according to its value as other real property is taxed.
II. Federal Law Controls When State Law Conflicts Concerning Tax Exemption
A federal law supplants a conflicting state law under the authority of the Supremacy Clause of the Constitution of the United States. United States Const. art. VI; Gibbons v. Ogden, 9 Wheat. 1, 211 (1824). The tax exemption provisions of the Act prevail over any conflicting state statutes which may be read to authorize the imposition of recordation taxes against the Bank. See 1987-1988 Att'y Gen. Ann. Rep. 504 (federal statute exempting Farm Credit Banks from certain federal, state and local taxation prevails over conflicting state statutes).
III. Recordation Taxes on Bank Prohibited by Act
The Act prohibits any state or local taxation on the Bank except taxes on its real estate. A recordation tax is a tax on the privilege of using the state's registration laws; it is not a tax on real estate.2 Pocahontas Collieries Co. v. Comm'lth, 113 Va. 108, 73 S.E. 446 (1912). A deed of trust with the Bank as beneficiary is within the language of the federal statute exempting the Bank from the imposition of these taxes. It is my opinion, therefore, that the Bank is exempt from payment of the recordation tax imposed by § 58.1-803 on the deed of trust you present.3
1 You include a copy of the deed of trust with your request.
2 The Supreme Court of Virginia has held that, under a federal statute similar to § 3019(a) of the Act, the recordation tax is unenforceable against a federal land bank. Federal Land Bank v. Hubard, 163 Va. 860, 178 S.E. 16 (1935).
3 This conclusion is in agreement with those from other states that have considered this issue. See Tenn. Dep't Rev. Ltr. Ruling #88-3 to Paul T. Scheuerman (scope of Bank's exemption from recordation tax assessed pursuant to Tenn. Code Ann. § 67-4-4-9); letters from James E. Silvey & J. V. Parramore, Jr., Fla. Dep't Rev., to Bernard A. Barton, Jr. (Nov. 15, 1988) (clarification of Technical Assistance Advisement 88(M)-004 A as to exemption of notes and mortgages from documentary stamp tax; intangible personal property owned by Bank exempt from tax); from John P. Dugan, N.Y. Dep't Tax'n & Fin., to Brian Flanagan, Esq. (Apr. 25, 1985) (opinion advising that no mortgage recording tax due on mortgage to Bank); from Catherine M. Shultz, Md. Off. Att'y Gen., to Hon. Larry W. Shipley (Feb. 21, 1985) (allowance of claim for refund of recordation tax Bank paid for recording of financing statement).
Attorney General's Opinion