Tax Type
Recordation Tax
Description
Instruments of Trust
Topic
Documents Subject to Tax
Date Issued
04-02-1992
[Opinion - Virginia Attorney General: 1992 at 183]
REQUEST BY: The Honorable Charles E. King, Jr. Clerk, Circuit Court of Gloucester County P.O. Box N Gloucester, Virginia 23061
OPINION BY: Mary Sue Terry, Attorney General
OPINION:
You ask whether a recordation tax may be imposed on several instruments to which the Resolution Trust Corporation (the "Corporation") is a party.
I.Facts
Your inquiry concerns three instruments involving the Corporation as conservator or receiver for a failed savings bank.1 The first instrument is a "trustee's deed" pursuant to which the trustee of real property under a deed of trust transfers the property to the Corporation, acting as purchaser of the property at public auction. The second instrument is a "refinance deed of trust" under which the Corporation is the beneficiary/lender. The third instrument is a "bargain and sale deed" pursuant to which the Corporation, as grantor, transfers property to the trustee of a revocable living trust.
II. Applicable State and Federal Statutes
Section 58.1-812(A) of the Code of Virginia provides that, "except as otherwise provided in [Chapter 8 of Title 58.1], no deed [or] deed of trust . . . shall be admitted to record without the payment of the tax imposed thereon by law." § 58.1-801 imposes a recordation tax on deeds generally. § 58.1-802 imposes an additional tax, payable by the grantor, "on each deed [or] instrument . . . by which lands . . . or other realty sold is granted, assigned, transferred, or otherwise conveyed to, or vested in the purchaser . . . ." § 58.1-803 imposes a recordation tax on deeds of trust.2 § 58.1-811 provides certain exemptions from these taxes, none of which applies to the facts you present.
The Corporation was established by the Financial Institutions Reform, Recovery, and Enforcement Act of 1989, Pub. L. No. 101-73, 103 Stat. 183 (codified as amended in scattered sections of 12 U.S.C.) (the "federal Act"), which establishes the Corporation as "an instrumentality of the United States." 12 U.S.C.A. § 1441a(b)(1)(A) (West Supp. 1991). The federal Act authorizes the Corporation to perform a broad array of functions with respect to failed financial institutions, including acting as conservator and receiver for those institutions. See 12 U.S.C.A. § 1441a(b)(4) (West Supp. 1991). § 1441a(g) (West Supp. 1991) further provides that the Corporation,
the capital, reserves, surpluses, and assets of the Corporation . . . and the income derived from such capital, reserves, surpluses, or assets shall be exempt from State, municipal, and local taxation except taxes on real estate held by the Corporation, according to its value as other similar property held by other persons is taxed.
III. Federal Law Controls if State Law Conflicts
A federal law supplants a conflicting state law, by virtue of the supremacy clause of the Constitution of the United States. U.S. Const. art. VI; Gibbons v. Ogden, 22 U.S. (9 Wheat.) 1,211 (1824). Furthermore, states and localities generally are prohibited from taxing the federal government and its instrumentalities except when Congress has expressly authorized them to do so. See, e.g., Agricultural Bank v. Tax Comm'n, 392 U.S. 339, 340 (1968); McCulloch v. Maryland, 17 U.S. (4 Wheat.) 316 (1819). Accordingly, the tax exemption provisions of the federal Act prevail over any conflicting state statutes that may be read to impose recordation taxes against the Corporation. See Att'y Gen. Ann. Rep.: 1991 at 278 (federal statute exempting Federal Deposit Insurance Corporation from payment of penalties imposed for late payment of real property tax prevails over state statute imposing such penalties) (copy enclosed); 1990 at 259 (federal statute prohibiting taxation of National Consumer Cooperative Bank prevails over state statute imposing recordation tax on beneficiary of deed of trust); 1987-1988 at 504 (federal statute exempting Farm Credit Banks from certain federal, state and local taxation prevails over conflicting state statutes).
IV. Recordation Taxes on Corporation Prohibited by Federal Act
The federal Act prohibits any state or local taxation on the Corporation 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.3 Pocahontas Collieries Co. v. Com'lth, 113 Va. 108, 73 S.E. 446 (1912). All three of the instruments about which you inquire are within the language of the federal statute exempting the Corporation from the imposition of these taxes. It is my opinion, therefore, that the Corporation is exempt from payment of the recordation taxes imposed by § 58.1-801, § 58.1-802 or § 58.1-803 on the instruments you present.
1 You include a copy of each instrument with your request.
2 Sections 58.1-814 and 58.1-3800 authorize the governing body of any city or county to impose an additional recordation tax equal to one-third of the amount of the state recordation tax.
3 The Supreme Court of Virginia has held that, under a statute similar to § 1441a(g) of the federal Act, the recordation tax is unenforceable against a Federal Land Bank. Federal Land Bank v. Hubard, 163 Va. 860, 178 S.E. 16 (1935).
Attorney General's Opinion