(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 respect 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.

69937-56-pt. 1-7

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 ; (2) subject under any other law to payments of taxes or payments in lieu of taxes to the same tax authority; or (3) subject to revenue-sharing under Federal law.

(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; or (2) 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, or detention farm; (7) hospital, dispensary, clinic, or other medical facility; (8) home for the aged or sanatorium; (9) quarantine or immigration station; (10) cemetery; (11) aid to navigation administered by the Coast Guard; (12) beacon or other aid to air navigation administered by the Civil Aeronautics Administration; (13) 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 (14) 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.

Section 7. Limitations on payments in lieu of taxes

(a) For any particular tax authority, the total amount of payments in lieu of taxes in any one fiscal year would be subject to comparison with a standard established by this subsection. If the aggregate of such payments under section 5 to be made for any fiscal year to a single tax authority by one or more Federal agencies exceeds the aggregate amount which the authority levies on all non-Federal taxable property in its territorial jurisdiction, any such Federal agency may apply to the Board for an order reducing its payment.

When it received such an application, the Board would notify the tax authority and each Federal agency. After a hearing it would determine whether payment of the aggregate amount payable under section 5 would confer on the tax authority unwarranted benefit contrary to the interest of taxpayers of the United States. If the Board determined that the payment would confer unwarranted benefit, it would prescribe (1) a lower aggregate which it determined to be fair and equitable, and (2) the portion thereof to be paid by each Federal agency. The revised amount could not be less than the aggregate amount of taxes levied by the tax authority for the applicable tax year on all non-Federal taxable property in its territorial jurisdiction. The portion to be paid by each Federal agency is to be proportionate to its share of the assessed valuation of Federal property involved in the payments.

(b) No payment in lieu of taxes is to be made under section 5 (or section 8) to a tax authority which fails to furnish services to any Federal property or to the Federal personnel or their families on the same terms on which the service is furnished to any other property or resident. This restriction does not apply where the Federal agency has expressly waived the furnishing of the service as unnecessary or undesirable.

Section 8. Transitional payments in lieu of taxes

(a) Provision is made for payments in lieu of taxes with respect to all Federal property which (1) is of any of the excluded classes listed in section 6 (c) and not within any class described in section 6 (b) or 6 (d); (2) was acquired by the United States or any Federal agency from a taxable person within the 10 years just preceding enactment of the bill; and (3) is not subject to the payment of any tax under section 4 [the reference in the printed bill is, erroneously, to section 2].

(b) The payments under subsection (a) would be made with respect to any such property acquired by the United States or any Federal agency on or after the effective date of the act. The amount to be paid in each of the first two fiscal years after acquisition would equal the full payment in lieu of taxes that would be made under section 5; and the amount of the annual payments would be reduced for each succeeding biennium by 20 percent of the original amount, so that in the 11th year after acquisition and thereafter no further payments would be made. Any taxes which may have been paid by any person for the tax year in which the property was acquired are to be deducted from the payment for the first fiscal year after acquisition, but any such tax payment is to be included in computing the payments to be made under this section for succeeding fiscal years.

(c) The stepdown formula provided in subsection (b) is to apply to payments with respect to property acquired before the effective date of the act. No payment is to be made for any fiscal year which ended before the effective date of the act, but for the purpose of determining payments in succeeding fiscal years the amount is to be computed as if payments had been made in the years preceding the effective date.

(d) The limitations in paragraph (1) of subsection (c) and in subsections (d), (e), and (f) of section 5 would apply to payments under section 7. The prohibition in section 7 (b) would also apply.

Section 9. Consent to levy of special assessments

(a) Except as otherwise provided in the bill, all Federal property would be subject to the levy and collection of any special assessment upon real property to the same extent and under the same conditions as other similar property, whenever the assessment is levied upon non-Federal as well as Federal property. The tax authority is required to treat the Federal property at least as favorably as like property owned by taxable persons.

(b) Any portion of a special assessment is to be paid by the Federal agency which is the controlling agency for the property at the time that portion of the special assessment becomes 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.

Section 10. Information concerning Federal property

Upon proper written request from any State tax authority, each Federal agency which is controlling agency for any Federal property within the territorial jurisdiction of the tax authority is to furnish to the tax authority information concerning the Federal property similar to that which may be lawfully required with regard to like property owned by taxable persons.

Section 11. Federal Tax Payments Board

(a) The bill establishes a bipartsan Federal Tax Payments Board of three members appointed by the President by and with the advice and consent of the Senate. Excepting for 2 of the original members, the appointments are to run for 3-year overlapping terms. The President is to designate the Chairman. Any member may be removed by the President, after notice and hearig, for malfeasance in office, neglect of duty, or incompetnce, but for no other cause.

(b) Two members shall constitute a quorum, and a vacancy will not impair the right of the remaining members to exercise the Board's powers. The Board is to have an official seal, to be judicially noticed.

(c) Each Board member is to receive a salary of $15,000 a year, is to be eligible for reappointment, and shall not engage in any other business, vocation, or employment.

(d) The Board may appoint and fix the compensation of a chief clerk, examiners, and other necessary personnel.

(e) The Board would be empowered to make necessary rules and regulations, not inconsistent with the provisions of the act.

Section 12. Powers and duties of the Board

(a) The Board is given the following duties :

(1) It is to prescribe such uniform rules, regulations, and forms as may be required for the submission by State tax authorities of claims for payments authorized by the act.

(2) It is to promulgate such uniform rules and regulations as may be necessary to provide for the making by Federal agencies of the authorized payments and for the determination of the amounts.

(3) It is to consult, at least once in each calendar year, with the advisory committee established under section 13 [the reference in the printed bill is, erroneously, to section 12].

(4) Upon application by any State tax authority or Federal agency, the Board is to hear and determine any question of fact or law concerning the liability of any Federal agency to make any payment under the act, the identity of Federal property subject to any payment under the act, or the amount or any such liability. However, the Board is not to hear or determine any such question until the parties to a controversy have exhausted administrative and judicial remedies available under law in effect within the jurisdiction of the State tax authority concerned for the determination of any question concerning the nominal Federal tax liability with respect to property involved in the application.

(5) To transmit to the President and the Congress annually a report containing a full statement of its activities during the calendar year, including the names, salaries, and duties of Board employees; an account of moneys disbursed by the Board; a description of proceedings heard or determined by, or pending before, the Board; and any recommendations the Board considers advisable for legislation respecting administration of the act.

(b) When an application is filed with it for any determination under the act, the Board (or any of its members, or any examiner designated by it) may summon and join in the proceeding Federal agency or State tax authority found to be a necessary party, hold hearings, administer oaths, examine witnesses and receive evidence, and require by subpena the attendance and testimony of witnesses and production of relevant documentary evidence. Subpenas are to be issued on behalf of any Federal agency or State tax authority which is a party to the proceeding, on request and upon a statement of general relevance and reasonable scope of the evidence sought. Witness fees and mileage are to be the same as in United States district courts. The aid of any district court may be invoked in case of disobedience to a subpena, and failure to obey an order of the court may be punished as contempt.

(c) All hearings under this section are to be public. Each party would have the right to assistance of counsel, to offer evidence and submit rebuttal evidence, and conduct cross-examination. A transcript of the stenographic record of the testimony is to be filed in the Board's office.

(d) Each determination by the Board under this section is to be final and conclusive upon all State tax authorities and Federal agencies who are parties to the particular proceeding, and the determination is not to be questioned by any court or any accounting officer of the Government.

Section 13. Advisory Committee

(a) The President is to appoint a 12-member Advisory Committee on Federal tax payments. Six of the members are to be officers or employees of Federal agencies, 3 are to be officers or employees of State governments, and 3 are to be officers or employees of other State tax authorities (i. e., local governments). The President is to designate the chairman.

(b) The duties of the Committee are

(1) To study the administration of the act and problems arising in connection therewith;

(2) To consult with the Board, upon its request, in an advisory capacity in the solution of such problems; and

(3) To transmit to the President from time to time a report containing a summary of the results of its studies, together with its recommendations for administrative or legislative changes to promote the efficient, economical, and equitable administration of the act.

(c) Members who are officers or employees of any Federal agency would receive no additional compensation for Advisory Committee service. Others may be paid not in excess of $50 for each day of service, as the President shall prescribe. All would be reimbursed for necessary travel and other expenses. These payments would be made from appropriations to the Board.

Section 14. Action for collection of payments

(a) Any State tax authority may file an action to recover any unpaid portion of a claim for payment under the act which it has duly filed with any Federal agency. The action may be filed in the United States district court for the district where the authority maintains its principal executive or administrative office. The court would have jurisdiction to hear and determine the matter and to enter such judgment or order as it determines to be required to carry into effect the provisions of the act. A judgment or final order entered by the district court would be subject to appeal pursuant to section 1291 of title 28, United States Code.

(b) Action upon any claim could be instituted under this section by any State tax authority upon the expiration of 1 year after (1) the filing of the claim under section 6 (a) [this reference appears to be an error; presumably section 5 (c) is intended], or (2) the completion of any administrative or judicial proceeding instituted in conformity with the provisions of the bill for the determination of the amount due under the claim, whichever is later. No action under this section may be brought after 6 years after the first date on which the action could have been instituted.

(c) Process in any action under this section may be served on the chief administrative officer of the agency who maintains an office in the judicial district in which the action is instituted, or on the head of the agency.

(d) Failure of a Federal agency to make any payment authorized by the act, or to make timely payment, is not to subject any Federal agency, or any purchaser of property from a Federal agency, to the payment of any penalty or penalty interest or any payment in lieu of these. Likewise, it is not to subject any Federal property to any lien, attachment, foreclosure, or other legal proceeding not specifically authorized by the act.

Section 15. Appropriations

This section authorizes appropriation to each Federal agency of such sums as may be required for the discharge of its duties and obligations under the act. Section 16. Separability

If any provision of the act, or its application to any Federal agency or any State tax authority, is held to be invalid, this is not to affect the remainder of the act and the application of the provision to other Federal agencies and State tax authorities.

Section 17. Effective date

Sections 4, 5, 8, and 9 (the sections providing for consent to taxation of certain property, for continuing or transitional payments in lieu of taxes on certain other property, and for consent to special assessments) would become effective on July 1, 1956. All other provisions would become effective on the date of enactment.

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

PROVISIONS OF S. 2754 (84TH CONG.)

A BILL To authorize the taxation of certain Federal real property by State and local tax authorities, and for other purposes

The bill (S. 2754) provides consent generally to the levy of State and local real property taxes and special assessments against Federal real property. A. summary description of each section follows:

Section 1. Short title

The act may be cited as the "Federal Real Property Tax Act of 1955." Section 2. Definitions

Some words or 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 Gov.. ernment 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.

"Controlling agency," when used in relation to any Federal property, means the Federal agency charged with the duty of administering the property.

"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.