Affirmed by
~Brenham Production Credit
Assn., v., Zeiss
Tex. Sup. Ct.
264 SW 2d 95
&ion. Robeit S. Calvert Opinfm No. V-886
Gomptrsller of Public Accounts
Austin. Texas Rc: The liability of pzoduction
credit corpbrotieas for t&e
payment of ad valorem tax,
Dear Mr. C8lvert:
You rcquelit the opinion of this office upon the question
prcranted in your letter of Augu6t 3, 1949. which is as foliows:
“This Department has received an inquiry from
the Tax iisseasor-Collector of Zavala County, Texas
for in6tructions as to whether the ‘Ninter Garden I-ro-
duction Credit Association’ Co-op Bnnk is subject to
the ad valorem tax in that county. Before advising the
tax collector, this Department desires your opinion on
the following question:
“16 a production credit cdrporation or association
6ubjoet to ad valorcm tax?
“%%06e rs6ociations h6ve never rendered their
rtsck Co? taxe6 a6 have other banks. Originally the
goverpnwnt through the Intermediate Credit B.xnk of
Heu6tdh furnished the entire capital structure for these
production credit asaociation6, but at present most of
there credit production associations have paid off all
~Cftunent indebttdnesr for the original capital stock
and art now owned 100% by their members.”
The an6ker to your question i6 found in Section 1138~.
U.tj.C.&, WhiCh i&3a6 fOl~OW6:
“Tie~Centrsl Bnnk for Cooperatives. and the Pro-
&aaiioa Credit Corporation6, Predixtion Credit Asso-
cirtion6. and Banks for Cooperatives, organiced under
thl6 chapter. and their obligations. shall be deemed to
,’ be in6trumentaWier of the United State6, and as such,
any oM1 &&I twtaa, debenturer, bonds, and other such
Hon. Robt. S. Calvert, page 2 (11-886)
obligations issued by 6UCh banks, a6sociation.s. or cor-
porations shall be exempt both a6 te principal and inter-
est from all taxation (except surtaxes. estate, inherit-
ance, and gift taxes) now or hereafter imposed by the
United States or by any State, Territorial, or local tax-
ing authority. Such banks. associations, and corpora-
tions, their property, their franchises. capital, reserves,
6urplus. and other funds, and their income shall be ex-
empt from all taxation now or hereafter imposed by the
United States or by any State, Territorial, or local taxing
authority; except that any real property and any tangi-
ble personal property of such banks, associations, and
corporations shall be subject to Federal, State, Terri-
torial, and local taxation to the same extent as other
similar property is taxed. The exemption provided here-
in shall not apply wfth respect to any Production Credit
Association or its property or income after the stock
held in it by the Production Credit Corporation has been
retired, or with respect to the Central Bank for Coop-
eratives, or any Production Credit Corporation 6r Bank
for Cooperatives or its property or income after the
stock held in it by the Uni)ed States has been retired,
June 16, 1933, c. Sg, sec. 63. 46 Stat. 267.”
You state, “but at present most of these credit produc-
tion associations have paid off all government indebtedness for the
original capital stock and are now owned 100% by their members.”
As to such corporations the limited exemption provided in the fore-
going F&era1 statute cda6es to~.treapplicable:under the expres~s
terms of the statute. However, where this conditibnnioes net obtain,
$#Ialimited exemption provided in the statute is applicable but applies
only to intangible personal property such as notes, debentures, bonds
and other such obligations issued by such banks, associatieu or cer-
porations, both as to principal aad Merest.
It is further observed that the statute provide6 that “axy
real property and any tangible personal property of such basks, a6-
sociations, and corporations shall be &abject to ., . , St&e m. . and
local taxation to the same extent as other similar property i6 turd”;
thu6 subjecting real property and tangible personal property to ad
valorom tu6tien at all time6.
In brief, after the stock held by the Production Credit
Corporation or the United States has been retired, the intangible’ pcr-
tonal property theretofore exempt, such as notes, debentures, bsndr,
L t
Hon. Rabt. 5. Calvert. page 3 (V-886)
and other such obligationa iseued by such banks, associrtionr or cor-
porations, both as to principal and interest, are subject to ad valorem
ta.res to the same extent as the property of any other corporation in
this State. But even before this has bccurred. the real estate and
tangible personal property of such corporations are subject to ad
valorem taxes aa other property of corporations is taxed under the
laws of this State, and only intangible personal property, such as
notes, debentures, bonds and other such obligations issued by such
banks, associations or, corporationa, both as to principal and inter-
est, is exdmpt.
SUMMARY
The real estate and taqible personal property
of Production Credit Corporations are subject to ad
valorem turtion, but intangible personal property,
such a8 tiotep, debentures, bonds and other such oblir
gatienr iarued by such banks, associations or corpos
rations, both a8 to principal and interest, is exempt
so long as there is ouCst&nding any of the stock of such
corporations owned by the Production Credit Corpora-
tion or the United States. When this stock is retired,
however, such intangibla personal property as herein
enumerated becomes subject to ad valorem taxation to
the same extent as is applicable to other corporations
azkdtheir property under the laws of this State.
Very truly yours
ATTORNEYGENERALOFTEXAS
*
‘w lgG&d
L. P, Lollrr
Assistant
ATTORNEYGENEML