In May, 1979, the Council of the American Bar Association Taxation Section established a joint task force, consisting of members from the Committee on Banking and Savings Institutions and the Committee on State and Local Taxation, to review the subject of multistate taxation of depositories. The Council thought that this was an especially propitious time for such a review, since the 1976 legislation had just opened an entirely new area of taxation for the states. It was hoped that recommendations might result, the implementation of which might prevent the confusion inherent in the multistate taxation of industry from being transported into this new area.
After three years of work, the task force developed proposed federal legislation to govern state and local taxation of depositories. The proposed legislative recommendation was adopted by the American Bar Association in February, 1982 as an official position of the Association. At the time of this writing, the task force is in the process of completing an extensive and detailed report on its work. It is anticipated that as soon as the report is completed, the proposed legislation will be introduced into Congress.
The proposed legislation (the "Bill") has four separate and distinct aspects: a jurisdictional threshold defining the minimum level of activity within a state necessary to subject a depository to taxation within that state; a prohibition of discriminatory taxation against out-of-state depositories; a repealer of an anachronistic provision governing the taxation of Edge Act corporations; and a maximum limit on the portion of a depository's tax base that a state may subject to tax.: It is the purpose of this Article to explain briefly the proposed legislation, a copy of which is contained in the Appendix hereto, so that interested parties may begin to focus upon it. It is hoped that this will result in additional input to Congress, thereby enabling Congress to act on the basis of a more complete record.