Is a federal land bank association's personal property — including a registered vehicle — exempt from Utah property tax and the uniform fee in lieu of it?

Plain-English summary

A county assessor's office asked the Tax Commission whether a company's personal property — specifically a vehicle it had come in to register — was exempt from Utah property tax. The company had submitted its charter showing it was a "federal land bank association" chartered under 12 U.S.C. § 2091 (part of the federal Farm Credit System), rather than the IRS Form 501(c)(3) the assessor's office had previously (and incorrectly) asked for.

The Commission held the vehicle exempt. Federal law, 12 U.S.C. § 2098, exempts a federal land bank association's personal property — its capital, reserves, surplus, and income — from all state, municipal, and local taxation, with only one carve-out: its real estate can still be taxed like similar property owned by others. Because the vehicle in question is personal property, not real estate, it falls squarely within the federal exemption.

The Commission then extended the analysis to Utah's uniform fee in lieu of ad valorem tax — the flat fee Utah charges on registered vehicles weighing 12,000 pounds or less instead of a traditional ad valorem property tax. Utah Code Ann. § 59-2-405.1(2)(b)(iv) exempts from that uniform fee any tangible personal property that is already exempt from ad valorem property tax "under the laws of this state or the federal government." Since the vehicle was federally exempt from ad valorem tax, it was automatically exempt from the uniform fee too.

The Commission also corrected the earlier, mistaken guidance the assessor's office had given: no IRS 501(c)(3) designation is required for this exemption — a federal land bank association's charter is sufficient proof of its exempt status.

What this means for you

County assessors

When a taxpayer claims exemption as a federal land bank association (or a similarly federally chartered entity), look for the entity's federal charter, not an IRS 501(c)(3) letter — those are different legal categories, and demanding the wrong document can wrongly delay or deny a valid exemption. The exemption covers personal property broadly, including registered vehicles subject to the uniform fee, but not real estate.

Federal land bank associations and similar Farm Credit System entities

Your personal property, including vehicles, is exempt from Utah property tax and the uniform fee under federal law — you don't need to separately qualify as a 501(c)(3) charity. Keep your federal charter on hand as proof when registering vehicles or filing personal property affidavits.

Accountants and tax professionals

This is a straightforward federal-preemption case: 12 U.S.C. § 2098 does the exempting work directly, and Utah's uniform-fee statute (§ 59-2-405.1(2)(b)(iv)) is drafted to automatically track whatever is exempt from ad valorem tax "under the laws of this state or the federal government" — so any federally tax-exempt personal property should flow through to uniform-fee exemption too, without needing separate state authorization.

Common questions

Q: Does this exemption cover real estate owned by a federal land bank association?
A: No. 12 U.S.C. § 2098 specifically carves real estate back out — it's taxed the same as similar real estate owned by anyone else.

Q: Do I need a 501(c)(3) letter to claim this exemption?
A: No. The Commission expressly rejected that requirement; the entity's federal land bank association charter is sufficient.

Q: Does the exemption apply automatically, or does the taxpayer need to do anything?
A: The ruling describes the county assessor exempting the property "upon a federal land bank association presenting a county with evidence, such as a charter" — so the taxpayer needs to affirmatively show its status, but no special application form is required.

Citations and references

Statutes:

• 12 U.S.C. § 2098 (federal tax exemption for federal land bank associations)
• 12 U.S.C. § 2091 (federal land bank association chartering)
• Utah Code Ann. § 59-2-405.1 (uniform fee in lieu of ad valorem tax)
• Utah Code Ann. § 59-2-405.1(2)(b)(iv) (uniform fee exemption for federally/state exempt property)

Source

• Landing page: https://tax.utah.gov/commission/rulings/
• Original PDF: https://files.tax.utah.gov/tax/commission/ruling/02-002.htm

Original ruling text

REQUEST
LETTER

02-002

Response 2/28/02

NAME

ADDRESS

Last Year when COMPANY came
into the Assessor�s office to register their vehicle, I had you check to see if
they should be exempt from taxes. When
you checked into the matter you had told me that we could ask for the Federal
Designation Form 501-C-3 to determine
if the COMPANY should be exempt.

This year when we sent out
our personal property affidavit and also asked COMPANY to provide us with Form
501-C-3, they indicated that they had never seen such a form but did include
their charter.

Will the paper work that they
sent me, which I have attached to this fax, be sufficient to grant them exempt
status.

NAME

ADDRESS

RESPONSE
LETTER

DATE

NAME

ADDRESS

RE: Advisory Opinion � Taxation of Property Owned by a Federal
Land Band Association

Dear NAME,

You have asked the Commission to determine whether
COMPANY, COMPANY is exempt from taxes on its personal property, specifically a
�vehicle� it owns. COMPANY, COMPANY has
supplied you with a copy of its charter from the Farm Credit Administration,
which you have forwarded to us. The
charter indicates that COMPANY, COMPANY is a �federal land bank association,�
chartered in accordance with 12 U.S.C. 2091.[1]

Federal law addresses whether property owned by a federal
land bank association may be taxed by state and local authorities in 12 U.S.C.
2098, which provides that:

Each Federal land bank association and the capital, reserves, and surplus thereof, and the income derived therefrom, shall be exempt from Federal, State, municipal, and local taxation, except taxes on real estate held by a Federal land bank association to the same extent, according to its value, as other similar property held by other persons is taxed.

This statute specifically exempts
a federal land bank association from state and local taxation, except on real
estate. Accordingly, personal
property owned by COMPANY, COMPANY is exempt from taxation by the State of Utah
or any of its political subsidiaries.

The personal property you specifically inquire about is a
�vehicle.� For purposes of this
opinion, we assume that the �vehicle� is one that is required to be registered
with the state and weighs 12,000 pounds or less. Such an item of personal property is also exempt from ad valorem
taxation under Utah Code Ann. �59-2-405.1, which insteads imposes a uniform fee
in lieu of ad valorem tax (�uniform fee�).
However, the Utah Legislature clearly establishes in subsection
59-2-405.1(2)(b)(iv) that �tangible personal property that is exempt from state
or county ad valorem property taxes under the laws of this state or the federal
government� is also exempt from the uniform fee.

In
summary, federal law exempts from ad valorem taxation the personal property,
including motor vehicles, owned by a federal land bank association such as
COMPANY, COMPANY. Utah law exempts from
the uniform fee any personal property that would be exempt from ad valorem
taxation under federal law. As a
result, the vehicle owned by COMPANY, COMPANY is also exempt from Utah�s
uniform fee. Accordingly, upon a
federal land bank association presenting a county with evidence, such as a
charter, indicating that it is such an entity, the county assessor should
exempt from taxation its personal property and from the uniform fee its motor
vehicles.

Although
you may have received indication earlier that a federal land bank association
would need to submit a form indicating that it is a federally designated
501(c)(3) organization, there is no such requirement. If you have any other questions, please contact us.

For
the Commission,

Marc
B. Johnson

Commissioner

MBJ/KC

02-002

[1] COMPANY, COMPANY, a federal land bank
association, and COMPANY, COOMPANY, a federal production credit association,
are both subsidiaries of COMPANY, COMPANY, a holding company. This advisory opinion addresses whether
personal property owned by COMPANY, COMPANY is taxable. The Tax Commission and COMPANY, COMPANY already
agree that personal property owned by COMPANYCOMPANY is taxable.