Acts, or parts of acts affected by repeal provisions

Acts or parts of acts not to be repealed

Section 509. Separability

This section provides that if any provision of the act or the application thereof to any person or circumstance is held invalid, this shall not affect the remainder of the act nor the application of such provision to other persons or circumstances. Section 510. Effective date

The bill is to become effective on the date of its enactment.

APPENDIX C TO STAFF MEMORANDUM No. 84-1-36

PROVISIONS OF S. 1657 (84TH CONG.)

A BILL To authorize the taxation of certain Federal property by State and local tax authorities, to provide for the payment by Federal agencies of sums in lieu of taxes with respect to certain other Federal property, and for other purposes

OUTLINE OF THE BILL

The bill (S. 1657) consists of introductory sections specifying a short title, declaring the general policy, and giving special definitions, followed by sections which may be outlined as follows:

Section 4 Consent to taxation of certain Federal property

Sections 5, 7, and 8-Payments in lieu of taxes with respect to certain Federal property

Section 6-Excluded properties

Section 9-Consent to levy of special assessments
Sections 10-13-Administrative provisions

Sections 14-16-General provisions

Sections 4 through 8, taken together, would establish a classification of Federal properties as a basis for annual payments to State and local government, related more or less closely to the property tax payments which might be made on privately owned properties. The categories and their treatment may be summarized as follows:

1. Exclusions.---Certain groups of properties would be exempted (by sec. 6) from either taxation under section 4 or payments in lieu of taxes under section 5. These exclusions cover

(a) Any Federal property (1) acquired by any Federal agency before September 8, 1939, or (2) subject under any other law to such payments to the same tax authority.

(b) Any Federal property which (1) if privately owned, would be exempt from tax because of its use, (2) is the subject of revenue-sharing under Federal law, or (3) is devoted primarily to any local governmental use, e. g., a courthouse or post office.

(c) Properties in certain uses specifically listed.

(d) Any stock of strategic or critical material or any agricultural commodity in the custody of a Federal agency, or other personal property now devoted to an industrial or commercial use.

2. Transitional payments. The properties excluded by subsection 6 (c) would generally be subject under section 8 to a system of transitional payments in lieu of taxes during a period of 10 years after enactment of the bill.

3. Taxation.-Federal property of the following classes would be subject under section 4 to State and local taxation, the same as other like property in the same jurisdiction:

(a, Property held to secure a Federal agency against loss in connection with a loan, contract of insurance, or guaranty.

(b) Property leased or sold under a conditional sale contract to any taxable person.

4. Payments in lieu of taxes. - Federal property of the following classes would be subject under section 5 to payments in lieu of taxes unless it is excluded by various limiting provisions:

(a) Property devoted to commercial or industrial use by or on behalf of a Federal agency.

(b) Property devoted to housing of individuals for which rent is recieved. (c) Property devoted primarily to any other use except a local governmental use.

Section 9 would consent to the levying against any Federal property of special assessments for local improvements, subject to requirements that any assessment be levied upon non-Federal as well as upon Federal property, and that at least as favorble treatment be accorded the Federal propetry as to like property owned by taxable persons.

Sections 10 and 11 would establish a Federal Tax Payments Board and prescribe its powers and duties, which are the general supervision of the payments authorized by the bill. The bill generally assigns initial responsibility for payments to the property-using or owing agencies subject to appeals to the Board. Section 12 provides for an advisory committee representing Federal, State, and local interests.

A summary description of each section follows :

Section 1. Short title

The act may be cited as the Federal Property Tax Authorization Act of 1955. Section 2. Declaration of policy

Subsection (a) of the declaration of policy states that, although the United States is under no constitutional obligation to pay taxes or to make financial contributions in lieu of taxes on account of Federal property, it is the policy of the United States hereafter to make such taxpayments and contributions in lieu of taxes as may be fair and equitable to compensate States and their political subdivisions and instrumentalities for tax revenue of which they are deprived by reason of the ownership or control by the Federal Government of property within the States.

Subsection (b) states that it is the purpose of the Congress, in enacting this legislation, to remove, insofar as practicable, inequities existing between taxpayers of State and local governments, on the one hand, and taxpayers of the Federal Government, on the other, in the distribution of governmental costs incident to property owned or used by the Federal Government.

Subsection (c) specifies that, in consideration for the payments authorized by the act, the Congress expects that the several State and local governments, when so requested, will make all public services normally provided by them available to the Federal Government, its property, and its officers and employees, the same as to other property and individuals.

Subsection (d) reserves to the Congress the right to amend, modify, or repeal the provisions of this act.

Section 3. Definitions

Some words and phrases used in the bill are defined restrictively or used in a special sense. Some of these are as follows:

"Federal agency" means any department, agency, office, or independent establishment in the executive, legislative, or judicial branch of the Government, and any corporation now or hereafter subject to the provisions of title I of the Government Corporation Control Act (31 U. S. C. 846).

"Federal property" means any property the legal title to which is held by the United States or any Federal agency.

"State tax authority" means any State, and any county, city, municipality, tax district, or other political subdivision or public entity thereof having authority under State law to levy and collect within its territorial jurisdiction any tax or special assessment.

"Tax" means any tax of general application levied according to value by any State tax authority upon property situated within its territorial jurisdiction, but does not include (1) any tax levied on the manufacture, purchase, sale, transfer, or use of any property, or (2) any tax levied or fee imposed for the procurement of any license, permit, or other authorization to engage in any form of activity.

"Property" means any real or tangible personal property. "Real property," used in relation to any tax or special assessment, means any interest in land, and any improvement thereon if such improvement constitutes real property under law in effect in the State tax authority imposing the tax or special assessment.

"Tangible personal property," used in relation to any tax, means any physical object, other than real property, defined as tangible personal property by law in effect within the State tax authority imposing the tax. It does not include any coin, bullion, currency, credit, security, or chose in action.

"Industrial or commercial use," used in relation to any Federal property, includes any use of the property for (1) the mining, fabrication, or repair of any article or commodity, (2) the generation of electrical energy, (3) the transportation of individuals or property, (4) the storage of property, and (5) the sale or leasing of commodities or services.

"Governmental use," used in relation to any Federal property, means any use other than (1) an industrial or commercial use, or (2) use for the housing of individuals for which rent is received.

"Local governmental use," used in relation to any Federal property, means any governmental use for the purpose of rendering public service to or for persons residing within the vicinity of the property.

Section 4. Consent to taxation of certain Federal property

(a) Except as otherwise provided in the bill, all Federal property of the following classes situated within the territorial jurisdiction of any State tax authority would be subject to any tax imposed by that authority to the same extent and under the same conditions as other similar property within its jurisdiction :

(1) Property, legal title to which is held by a Federal agency to secure any Federal agency against loss in connection with any loan, contract of insurance, or guaranty.

(2) Property, legal title to which is held by any Federal agency but which has been leased, or sold under a conditional-sale contract, to any taxable person.

(b) Taxpayments under subsection (a) are to be made by the Federal agency which is the controlling agency for the particular property at the beginning of the tax year for which the tax is imposed. If the agency ceases to exist before payment is made, payment shall be made by the successor Federal agency, as determined by the Director of the Bureau of the Budget.

Section 5. Payments in lieu of taxes with respect to certain Federal property

(a) Except as otherwise provided in the bill, payments in lieu of taxes are to be made to each State tax authority for each fiscal year with respect to all Federal property (other than that subject to tax under sec. 4 [the reference in the printed bill is, erroneously, to sec. 2]) of the following classes situated within the territorial jurisdiction of the authority:

(1) Any property devoted to commercial or industrial use by or on behalf of any Federal agency (2) Any property devoted to the housing of individuals for which rent is received.

(3) Any property devoted primarily to any other use except a local governmental use.

(b) Subject to limitations in the bill, the aggregate payment to each State tax authority for each fiscal year is to be a sum equal to (1) "the nominal Federal tax liability," reduced by (2) "the Federal credit against tax liability," and increased by (3) "the Federal specific liability." The three terms are explained in the bill as follows:

(1) "The nominal Federal tax liability" is the aggregate amount of taxes which would be payable to the State tax authority during the year with respect to all property of the classes specified in subsection (a) if legal title to the property were held by a taxable person for that portion of the applicable tax year during which title was held by one or more Federal agencies.

(2) "The Federal credit against tax liability" is the aggregate value of governmental services of kinds normally furnished by State tax authorities which, during the fiscal year, were furnished within the jurisdiction of the particular State tax authority by Federal agencies. This value is to be computed on the basis of the unit cost incurred by the authority in providing like services or (in the absence of such data) the unit cost incurred by comparable authorities in the vicinity.

(3) "The Federal specific liability" is the aggregate of expenditures incurred by the State tax authority during the fiscal year in furnishing to or on behalf of all such Federal property services of kinds not customarily furnished by the tax authority to or on behalf of other similar properties.

(c) No payment is to be made under this section to any State tax authority for any fiscal year, with respect to any Federal property, unless the authority

(1) files a claim with supporting information on a prescribed form. The claim is to be filed with the controlling agency for the property and is to relate to all Federal property subject to payment under this section which is controlled by that agency within the territorial jurisdiction of the State tax authority;

(2) files with the claim an itemized statement of (A) the property with respect to which the claim is made, (B) the assessed valuation placed by the tax authority on the property, (C) the nominal Federal tax liability claimed with respect to the property, (D) the tax rate or rates applied in computing the nominal Federal tax liability, (E) the amount of Federal credit against tax liability accorded to the controlling agency in computing the amount claimed from that agency under this section, and (F) the amount of any Federal specific liability included in the claim for payment; (3) files with the claim a detailed statement of the procedural action which may be taken to obtain administrative review, or judicial review, or both, with respect to the nominal Federal tax liability;

(4) for the purpose of determining the nominal Federal tax liability of the Federal agency, makes available to the agency all substantive and procedural rights, administrative and judicial, which would be available under law in effect within the authority in determining the valuation of the property, the rate of tax applicable, and the amount of tax payable if the property were owned by a taxable person; and

(5) for such purpose treats the Federal property in all respects in a manner at least as favorable as similar property owned by taxable persons.

(d) Each payment with respect to any property shall be made by the Federal agency which is the controlling agency for that property at the beginning of the fiscal year for which the payment is due. If the agency ceases to exist before payment is made, payment shall be made by the successor Federal agency, as determined by the Director of the Bureau of the Budget.

(e) Whenever a Federal agency and State tax authority fail to agree with respect to any question concerning the identity of Federal property claimed to be subject to payments under this section, the amount of the Federal credit against tax liability, or the amount of Federal specific tax liability, either the agency or the authority may apply to the Board for determination of the question. (f) Whenever more than one Federal agency controls properties subject to payments under this section which are within the territorial jurisdiction of any State tax authority, and determination of the amount payable by any such agency involves any question concerning the allocation among two or more agencies of the amount of Federal credit against tax liability or Federal specific tax liability, the State tax authority shall apply to the Board for determination of the question.

Section 6. Excluded properties

(a) No payment is to be made under section 4 or 5 with respect to any Federal property (1) acquired by any Federal agency before September 8, 1939, or (2) subject under any other law to payments of taxes or payments in lieu of taxes to the same tax authority.

(b) No payment is to be made under section 4 or 5 with respect to any Federal property which (1) if privately owned or controlled, would be exempt from tax because of the use to which it is devoted; (2) is the subject of revenue-sharing under Federal law; or (3) is devoted primarily to any local governmental use, including (without limitation) any courthouse, post office, and various other uses listed.

(c) No payment is to be made under section 4 or 5 with respect to any properties of the following types: (1) Office building not devoted to any industrial or commercial use and not included within any class listed in section 4 (a); (2) customs house; (3) facility for coining money or printing currency; (4) bullion depository; (5) river or harbor improvement; (6) prison, reformatory, detention farm, or disciplinary barracks; (7) hospital, dispensary, clinic, or other medical facility; (8) sanatorium, home for the aged, or facility providing domiciliary care; (9) cemetery; (10) aid to navigation administered by the Coast Guard; (11) beacon or other aid to air navigation administered by the Civil Aeronautics Administration; (12) facility used in the performance by any Federal agency of any police, investigative, or regulatory function (except any such function performed incidental to administering property of a class listed in section 4 (a) or 5 (a)); or (13) post, camp, station, fort, armory, airfield, proving ground, or other installation administered by any of the Armed Forces of the United States (except to the extent that any such installation may be devoted to an industrial or commercial use).

(d) No payment is to be made under section 4 or 5 with respect to (1) any stock of strategic or critical material or any agricultural commodity in the custody of a Federal agency, or (2) any other personal property not devoted to an industrial or commercial use.