Chase Manhattan Bank, N. A. v. Finance Administration of New York

Background

The dispute involves national banks that lease office space in New York City and keep their main offices there. The city assessed them for its commercial rent and occupancy tax for June 1, 1970 through May 31, 1972. The banks argued they could not be taxed except as Congress permits. A federal law enacted in December 1969 treated national banks like state banks beginning January 1, 1973 and included temporary rules allowing certain taxation before that date only if the State took an "affirmative action." New York increased the tax rate and its courts allowed collection, saying that satisfied the requirement.

Reasoning

The Court considered whether New York could collect the disputed tax before January 1, 1973. It examined the statute and its legislative history and concluded Congress intended States to take deliberate, affirmative steps before imposing or extending taxes on national banks prior to 1973. A mere increase in an existing tax rate did not show that the State had satisfied that requirement. The Court also read the law to treat occupancy and real property taxes separately from taxes on tangible personal property, so the tax at issue was not a "tangible personal property" tax for the statute’s purposes. The Court reversed the New York Court of Appeals.

Real world impact

Because of this decision, New York may not collect the challenged pre-1973 commercial rent and occupancy tax from national banks with principal offices in the State unless the State took the specific affirmative legislative action Congress required. The ruling protects such banks from those pre-1973 real-estate occupancy taxes and clarifies how the 1969 Act limits state tax collection from national banks.