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5000 - Statements of Policy
{{12-31-96 p.5331}}
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.
A. Authority
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.
C. Taxes
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.
{{12-31-96 p.5332}}
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
{{12-31-96 p.5333}}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]
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