Excise and Capital Stock Tax on Savings and Loan Associations

Subject:

G.S. 105-228.22

Requested By: W. L. Cole, Administrator Savings and Loan Division North Carolina Department of Commerce

Question: Are federally-chartered stock savings and loan associations subject to tax like mutual savings and loan associations, or like business corporations generally?

Conclusion: Federally-chartered savings and loan associations are subject to tax like mutual savings and loan associations

In a letter from W. L. Cole, Administrator, Savings and Loan Division, North Carolina Department of Commerce, the following facts are given:

1. "Pursuant to Federal law, Federal mutual associations may apply to the Federal Home Loan Bank Board for permission to convert into Federal stock associations; however, there is a current moratorium on such conversions."

    

2. "At present, Federal mutual associations are taxed like State mutual associations under Article 8D of Chapter 105 of the General Statutes. Under Article 8D such associations pay a capital stock tax and an excise tax. However, questions have arisen regarding the taxation of Federal mutual associations which convert to Federal stock associations."

    

Mr. Cole has asked "would such Federal stock associations be taxed under Article 8D or would such associations be taxed in the same manner as general business corporations organized under the provisions of Chapter 55 of the General Statutes?"

Subchapter I of Chapter 54 of the General Statutes relates to savings and loan associations generally, which are created pursuant to the laws of this State. Chapter 54A relates specifically to stock-owned as opposed to mutual, savings and loan associations created pursuant to State law, and G.S. 54-1(b) specifically requires such associations created under Chapter 54A to "be taxed as a business corporation organized under the provisions of Chapter 55", which is the "Business Corporation Act". The income of such corporations is taxed under the Corporation Income Tax Act, G.S. 105-130 et seq.

Other savings and loan associations are taxed pursuant to Article 8D, Subchapter I of Chapter 105 of the General Statutes, and in that connection, G.S. 105-228.22 provides:

"The provisions of this Article shall apply to every building and loan association or savings and loan association organized under the laws of this State or organized under the laws of another state and which maintains one or more places of business in this State and to every savings and loan association organized and existing under the "Home Owners Act of 1933" and which maintains one or more places of business in this State, all such associations hereinafter to be referred to as Building and Loan Association."

Article 8D then proceeds to levy a capital stock tax and an excise tax upon such associations.

Federal savings and loan associations are created pursuant to the provisions of the "Home Owners Loan Act of 1933", 12 USC § 1461 et seq. Since the Corporation Income Tax Act affects only those associations organized pursuant to Chapter 54A, and since federal associations are not organized pursuant to that Act but pursuant to federal law, the corporation income tax does not apply to them. However, since G.S. 105-228.22 specifically applies to "every savings and loan association organized and existing under the "Home Owners Loan Act of 1933" and which maintains one or more places of business in this State", we conclude that the taxes imposed by Article 8D apply to all such associations created pursuant to federal law, both mutual and stock.

Rufus L. Edmisten Attorney General

Myron C. Banks Special Deputy Attorney General