Baker v. Lindley, 82-1642
| Decision Date | 22 June 1983 |
| Docket Number | No. 82-1642,82-1642 |
| Citation | 449 N.E.2d 1301,5 Ohio St.3d 195 |
| Parties | , 5 O.B.R. 411 BAKER et al., Appellants, v. LINDLEY, Tax Commr., Appellee. |
| Court | Ohio Supreme Court |
Jerome J. Donnellon, Sharonville, for appellants.
Anthony J. Celebrezze, Jr., Atty. Gen., and Mark A. Engel, Asst. Atty. Gen., for appellee.
This cause presents a single issue: whether appellants are liable for the tax imposed under R.C. 5709.02 on shares deposited in a federal credit union for the 1980 tax year. In resolving this issue, the starting point for analysis requires a determination of what property appellants were required to list on their return.
R.C. 5711.03 provides, in part, that " * * * all taxable property shall be listed as to ownership of control, valuation, and taxing districts as of the first day of January, annually * * *." (Emphasis added.) The term "taxable property" is defined in R.C. 5711.01(A) as including " * * * all kinds of property, except real property, mentioned in section[s] 5709.01 and 5709.02 of the Revised Code * * *." The taxable property specified under R.C. 5709.02 includes "[a]ll money, credits, investments, deposits, and other intangible property of persons residing in this state * * *." 1 (Emphasis added.) Clearly, the shares on deposit in the federal credit union were subject to the intangibles tax.
Appellants contend, however, that the assessment, in reality, constitutes a tax imposed on financial institutions pursuant to R.C. Chapter 5725. As such, appellants maintain that the obligation to pay the tax rests with the institution in which the shares are deposited. See R.C. 5725.07. Appellants' contention necessitates an examination of the provisions of R.C. 5711.01(A) and 5711.03.
R.C. 5711.01(A) excludes from taxation such investments and deposits as are taxable at the source under R.C. Chapter 5725. The principle is further expanded upon under R.C. 5711.03, which provides that " * * * deposits not taxed at the source shall be listed as of the day fixed by the commissioner of tax equalization for the listing of deposits taxed at the source pursuant to section 5725.05 of the Revised Code." Thus, the focus of our inquiry narrows to a determination of whether deposits held by a federal credit union were taxable at the source for the 1980 tax year. If Mrs. Baker's shares were not taxable at the source, i.e., to the financial institution in which the shares were deposited, then the shares were required to be listed on the return and the subject assessment must be affirmed.
Pursuant to Section 1768, Title 12, U.S.Code, Congress has exempted federal credit unions from all federal, state and local taxation, except real property and tangible personal property which may be taxed in accordance with other similarly situated property. Although depositors' holdings may be taxed under Section 1768 of Title 12, federal credit unions are specifically relieved of all duties or burdens of collecting and remitting any such taxes. In pertinent part, Section 1768 provides:
" * * * Nothing herein contained shall prevent holdings in any Federal credit union * * * from being included in the valuation of the personal property of the owners or holders thereof in assessing taxes imposed by authority of the State or political subdivision thereof in which the Federal credit union is located; but the duty or burden of collecting or enforcing the payment of such a tax shall not be imposed upon any such Federal credit union * * *." ...
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- State v. Doran
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Northeast Federal Credit Union v. Neves, Civ. No. 87-275-D.
...purposes, but it may not impose upon the credit union any duty of collecting or enforcing payment of such taxes. Baker v. Lindley, 5 Ohio St.3d 195, 449 N.E.2d 1301, 1303 (1983). As was the case with respect to the federal reserve bank at issue in the case of Federal Reserve Bank of Boston ......