Director of Revenue of Missouri v. CoBank Acb

• Citation: 148 L.Ed.2d 830,531 U.S. 316,121 S.Ct. 941
• Decision Date: 20 February 2001
• Docket Number: 991792
• Parties: DIRECTOR OF REVENUE OF MISSOURI, PETITIONER v. CoBANK ACB, as successor to the NATIONAL BANK FOR COOPERATIVESSUPREME COURT OF THE UNITED STATES
• Court: United States Supreme Court

531 U.S. 316

121 S.Ct. 941

148 L.Ed.2d 830

NOTICE: This opinion is subject to formal revision before publication in the preliminary print of the United States Reports. Readers are requested to notify the Reporter of Decisions, Supreme Court of the United States, Washington, D. C. 20543, of any typographical or other formal errors, in order that corrections may be made before the preliminary print goes to press

DIRECTOR OF REVENUE OF MISSOURI, PETITIONER v CoBANK ACB, as successor to the NATIONAL BANK FOR COOPERATIVES

No. 99-1792

SUPREME COURT OF THE UNITED STATES

Argued November 28, 2000

Decided February 20, 2001

Syllabus

The Farm Credit Act of 1933 created various lending institutions within the Farm Credit System-including banks for cooperatives-and addressed their taxation. Each of these institutions is designated as a federally chartered instrumentality of the United States. E.g., 12 U.S.C. 2121. Respondent CoBank ACB is the successor to all rights and obligations of a bank for cooperatives. In 1996, CoBank filed amended returns on behalf of that bank, requesting an exemption from all Missouri corporate income taxes and refunds on the taxes it paid for 1991 through 1994. CoBank asserted that the Supremacy Clause accords federal instrumentalities immunity from state taxation unless Congress has expressly waived this immunity, and that, because the Act's current version does not expressly do so, banks for cooperatives are exempt from Missouri's corporate income tax. The State denied the request, but the State Supreme Court reversed, stating that because the Act's current version is silent as to such banks' tax immunity, Congress cannot be said to have expressly consented to state income taxation and, thus, the banks are exempt.

Held: Banks for cooperatives are subject to state income taxation. Pp. 5-9.

(a) Congress has provided that banks for cooperatives are subject to state taxation. The 1933 Act subjected such banks to state taxation except when the Unites States held stock in the banks. As soon as governmental investment in the banks was repaid (as it was by 1968), the banks had to pay state income taxes because the exemption from such taxation no longer applied. Congress did not change that rule when it amended the Act in 1971. Nor did various 1985 amendments-which discontinued the Government's authority to own stock in banks for cooperatives and deleted the two sentences within 12 U.S.C. 2134 that exempted such a bank from state taxation when the Government held stock in the bank-expressly change the taxation of banks for cooperatives. And, it would be surprising, indeed, if Congress had eliminated the States' ability to collect revenue from the banks sub silentio. The more logical interpretation, and one that accords with the Act's more than 50-year history, is that Congress merely deleted language in 2134 that had become superfluous once the United States no longer owned, and no longer could own, stock in banks for cooperatives. Pp. 5-8.

(b) The Act's structure confirms that banks for cooperatives are subject to state taxation. With respect to each lending institution in the Farm Credit System, the Act contains a taxation provision that specifically delineates that entity's tax immunity. Banks for cooperatives have been granted only limited tax exemptions. Had Congress intended to confer upon them the more comprehensive exemption it provided for other types of institutions, it would have done so expressly. Pp. 8-9.

10 S. W. 3d 142, reversed and remanded.

CERTIORARI TO THE SUPREME COURT OF MISSOURI

Thomas, J., delivered the opinion for a unanimous Court.

Justice Thomas delivered the opinion of the Court.

Opinion of the Court

In this case we are asked to decide whether the National Bank for Cooperatives, which Congress has designated as a federally chartered instrumentality of the United States, is exempt from state income taxation. We hold that it is not.

I

In the Farm Credit Act of 1933, 48 Stat. 257, as amended, 12 U.S.C. 2001 et seq., Congress created various lending institutions within the Farm Credit System to meet the specific credit needs of farmers. Among these institutions were banks for cooperatives, one in each of 12 farm credit districts, and a Central Bank for Cooperatives. These banks were designed to make loans to cooperative associations engaged in marketing farm products, purchasing farm supplies, or furnishing farm services.

Today, the Farm Credit System includes banks for cooperatives, production credit associations, farm credit banks, and federal land bank associations. 2002(a). By statute, each of these institutions is designated as a "federally chartered instrumentalit[y] of the United States." 2121 (banks for cooperatives and Central Bank for Cooperatives); 2141 (National Bank for Cooperatives); 2071(a) and (b)(7) (production credit associations); 2011(a) (farm credit banks); 2091(a) and (b)(4) (federal land bank associations). The Farm Credit Act also addresses the taxation of these institutions. The provision applicable to a bank for cooperatives, the institution at issue in this case, states:

"Each bank for cooperatives and its obligations are instrumentalities of the United States and as such any and all notes, debentures, and other obligations issued by such bank shall be exempt, both as to principal and interest from all taxation (except surtaxes, estate, inheritance, and gift taxes) now or hereafter imposed by the United States or any State, territorial, or local taxing authority, except that interest on such obligations shall be subject to Federal income taxation in the hands of the holder." 2134.

Respondent CoBank ACB is the successor to all rights and obligations of the National Bank for Cooperatives, which had been formed in 1989 through the consolidation of 10 district banks for cooperatives and the Central Bank for Cooperatives.¹ The National Bank for Cooperatives filed Missouri corporate income tax returns for the years 1991 through 1994 and paid the taxes shown on those returns. In March 1996, CoBank filed amended returns on behalf of the National Bank for Cooperatives, requesting an exemption from all state income taxes and refunds on the taxes paid-erroneously, it alleged-for 1991 through 1994. Relying on the doctrine of implied tax immunity that originated in McCulloch v. Maryland, 4 Wheat. 316 (1819), CoBank asserted that the Supremacy Clause of the Constitution accords federal instrumentalities immunity from state taxation unless Congress has expressly waived this immunity. CoBank argued that, because the current version of the Farm Credit Act does not expressly waive this immunity, banks for cooperatives are exempt from Missouri's corporate income tax. The Director of Revenue of Missouri denied the request.

On appeal, the Administrative Hearing Commission upheld the Director of Revenue's assessment of corporate income tax, because the National Bank for Cooperatives had not established that it was a federal instrumentality statutorily exempt from state taxation of its income. The commission determined that Congress did not provide expressly that banks for cooperatives, in contrast to farm credit banks and federal land bank associations, would have immunity from state income taxation. The commission reasoned that had Congress intended to confer upon banks for cooperatives the same immunity that was provided to farm credit banks and federal land bank associations, it would have done so expressly. For jurisdictional reasons, the commission did not decide CoBank's constitutional claim.

The Missouri Supreme Court reversed the commission's decision and held that banks for cooperatives are exempt from state income taxation.² Production Credit Assn. of Southeastern Mo. v. Director of Revenue, 10 S. W. 3d 142, 143 (2000). The Missouri Supreme Court held that the Supremacy Clause of the Constitution provides federal instrumentalities immunity from state taxation unless Congress has expressly waived this immunity. According to the Missouri Supreme Court, because the current version of the Farm Credit Act is silent as to such institutions' immunity from state taxation, Congress cannot be said to have expressly consented to state income taxation and, thus, the institutions are exempt from state income taxes. The Missouri Supreme Court noted that other courts that had addressed the issue of state taxation of member institutions of the Farm Credit System also had concluded that the States could not tax such institutions. Id., at 143-144 (citing Farm Credit Servs. of Central Ark., PCA v. Arkansas, 76 F.3d 961, 964 (CA8 1996), rev'd on other grounds, 520 U.S. 821 (1997); State v. Farm Credit Servs. of Central Ark., 338 Ark. 322, 327, 994 S. W. 2d 453, 456 (1999), cert. denied, 529 U.S. 1036 (2000); Northwest La. Production Credit Assn. v. State, 98-1995 (La. App. 11/5/99), 746 So. 2d 280).

The New Mexico Court of Appeals and the Indiana Supreme Court have reached the opposite conclusion with respect to state taxation of production credit associations. See Production Credit Assn. of Eastern N. M. v. Taxation and Revenue Dept., 2000 NMCA-021 26, 999 P.2d 1031, 1038, cert. denied, 997 P.2d 820 (N. M. 2000); Indiana Dept. of State Revenue v. Farm Credit Servs. of Mid-America, ACA, 734 N. E. 2d 551, 560 (Ind. 2000). Since the statutory history and provisions regarding the taxation of production credit associations and banks for cooperatives are virtually identical, compare 12 U.S.C. 2077 with 2134; compare Farm Credit Act of 1971, 2.17, 85 Stat. 602, with 3.13, 85 Stat. 608; compare Farm Credit Amendments Act of 1985, 205(d)(16), 99 Stat. 1705, with 205(e)(10), 99 Stat. 1705,³ we granted certiorari to resolve this conflict. 530 U.S. 1260 (2000).

II

Congress has expressly designated banks for cooperatives as "instrumentalities of the United States." 12 U.S.C. 2121. We have held, in addressing state taxation of contractors conducting business...