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United States v. State Board of Equalization … (1980)

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California Sales Tax Properly Imposed on Sales to National Banks

The United States and a national banking association challenged the imposition of California state and local sales taxes on sales of tangible personal property to national banks during the December 24, 1969 to December 31, 1972 bridge period covered by the 1969 temporary amendment to the federal statute governing taxation of national banks. At trial, summary judgment was granted the Board, and plaintiffs appealed.

The Ninth Circuit Court of Appeals held that California's sales tax on sales of tangible personal property to national banks was a tax imposed by a state which did not impose a tax or an increased rate of tax in lieu thereof within the meaning of P.L. 91-156, nor was the built-up rate of California's franchise tax on national banks imposed in lieu of the sales tax on sales of tangible personal property to a national bank. Thus, automatic imposition of the sales tax during the bridge period could not possibly result in unintended double taxation of national banks in violation of the amendment. United States v. State Board of Equalization (9th Cir. 1980) 639 F.2d 458.