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Volume 5 - Opinions of Counsel SBEA No. 56

Opinions of Counsel index

United States government property exemption (Farmers Home Administration) - Real Property Tax Law, § 401:

Real property which has been acquired by the Farmers Home Administration pursuant to the relevant provisions of the Housing Act of 1949 (42 U.S.C. §§ 1471-1490h), other than property used for administrative purposes, is taxable.

We have received an inquiry requesting our opinion as to the taxable status of homes acquired by the Farmers Home Administration [FmHA] upon a mortgage foreclosure or default. It is our understanding that the FmHA is an unincorporated federal agency.

In prior opinions we have stated that property of the Economic Development Administration and of the Small Business Administration, both agencies of the United States Government, are immune from taxation in the absence of federal legislation consenting to taxation (1 Op.Counsel SBEA Nos. 36 and 40, respectively).

Therefore, whether or not property acquired by the FmHA, also an agency of the United States Government, is taxable depends upon the existence of federal legislation which consents to its taxation.

We have been informed that titles to the homes in question were acquired pursuant to the Housing Act of 1949 (42 U.S.C. §§1471-1490h). Section 1490h was added by P.L. 95-128, title V, §512(a), 91 Stat. 1142 on October 12, 1977. This section provides, in part, as follows:

Taxation of Farmers Home Administration-held property.

All property subject to a lien held by the United States or the title to which is acquired or held by the secretary under this subchapter other than property used for administrative purposes shall be subject to taxation by a State, Commonwealth, territory, possession, district, and local political subdivisions in the same manner and to the same extent as other property is taxed . . .

That Congress intended to consent to taxation of FmHA property is further evidenced by the House Conference Report (No. 95-634) on this bill. At page 71 of the report, it is stated:

The House bill contained a requirement that, effective January 1 of the year of enactment, FmHA-held or acquired property other than property used for administrative purposes be subject to State and local taxes. The Senate amendment was similar to the House provision except that any jurisdiction which has received, prior to enactment of this bill, tax payments from the Department of Agriculture shall not be liable for, or be obligated to refund, such payments. The conference report contains the Senate provision. (1977 U.S. Cong. and Admin. News, p. 2991)

The Department of Agriculture has revised its regulations to reflect the new law. The relevant regulation now provides:

(f) Taxes (1) Property acquired by FmHA is subject to taxation by State, Commonwealth, territory, district, and local political subdivisions in the same manner and to the same extent as other property, unless State law specifically exempts taxation of real estate owned by the Federal Government. However, taxes and assessments on RH [i.e., Rural Housing] inventory property may not be paid for any time prior to January 1, 1977. For taxes levied on such property prior to January 1, 1977, FmHA may pay such tax prorated from January 1, 1977, for the time the property was owned by FmHA.

(2) The county supervisor will notify the appropriate taxing authority in writing when title to real estate has been acquired by the Government, and that claims for taxes during the Government’s ownership will be billed to FmHA at the county office address ... [7 C.F.R. §1955.63].

Subdivision 1 of section 401 (i.e., 400) of the Real Property Tax Law provides that, “Real property owned by the United States shall be exempt from taxation, except as otherwise provided by the laws of the United States.” In Fort Hamilton Manor v. Boyland, 4 N.Y.2d 192, 149 N.E.2d 856, 173 N.Y.S.2d 560, the Court of Appeals quoted the United States Supreme Court, “It is the rule that in a given case ‘taxation by a state or municipality may overpass the usual limits if the consent of the United States has removed the barriers or lowered them’ (Baltimore Nat. Bank v. Tax Comm. of Maryland, 297 U.S. 209, 211-212, 56 S.Ct. 417, 419, 80 L.Ed. 586).”

In our opinion, the 1977 Congressional Act quoted above (P.L.95-128) constitutes a waiver of the Government’s immunity from taxation within the intent of section 401 of the Real Property Tax Law. Therefore, real property which has been acquired by the Farmers Home Administration pursuant to the relevant provisions of the Housing Act of 1949, other than property used for administrative purposes, is taxable.

It should be noted that all the relevant provisions of the Housing Act of 1949 (42 U.S.C. §§1471-1490h) relate to the housing inventory of the FmHA and generally concern single-family farm dwellings. A provision similar to 42 U.S.C. §1490h exists with respect to the taxability of other FmHA property (7 U.S.C. §1984) such as farms themselves.

March 15, 1976
Revised June 9, 1978

Updated: