Court sides with banks on tax issue

Northwestern Financial Review, Mar 15, 2001

In a ruling banking industry observers consider a key victory, the U.S. Supreme Court ruled that CoBank and other production credit associations are not exempt from state income tax. CoBank, a federally-chartered, Government Sponsored Enterprise, argued it is exempt from paying income tax under implicit rules in the Farm Credit Act of 1985.

The Missouri Supreme Court had supported CoBank's argument. U.S. Justice Clarence Thomas said in the unanimous decision: "Had Congress intended to confer upon banks for cooperatives the more comprehensive exemption from taxation that it had provided to farm credit banks and federal land bank associations, it would have done so expressly as it had done elsewhere in the Farm Credit Act."