The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1907-07-23
BANKS MUST PAY
State Tax Commission Makes
Ruling on Exemption Law.
Kansas Municipal Bonds Are
: Liable to Taxation.
IN SPITE OF STATELAW
Exemption Statute Not Ap'
plicable to Bank Surplus.
Option Written for Security
Bank of Wellington.


given out by the state tax commits
sion. which will be of Importance to
all the bankers of the state. The
commission holds that even though the
state law exempts Kansas municipal
bonds from taxation. such bonds must
be listed and taxed when they form a
part of the banks surplus.
1t is possible that this decision may
give. rise to some litigation. for the
bankers of the state have been under
the impression that the exemption of
Kansas bonds from taxation was abso-
lutte and intended to put premium on
Kansas securities as an investment Tor
Kansas money.
The opinion of the state AK COM
mission is as follows:
wv. H Burks, Esq, Cashier of Securl-
~ State bank, Wellington. Kan
Dear Sir: The tax commission &C
knowIedges the receipt of your letter
of the 18th inst. which propounds the
following question:
g Referring to section To- chapIer
4OS of the last sessions laws we wouE
ike to know # this bank owned say
100000, of the bonds of the city or
Wellington, Kansas. or any other city
whether we would be permitted as
they are not taxable to deduct same
from our capital. surplus, and und1-
vided profits listed with the assessor
"'W. H BURKS, Cashier,
1.-The section Is referred to above
reads: Section 15-No person shall
state. county, city. school district and
municipal bonds of the state of Kan
sas, or other evidences of Indebtedness
of municipal corporations of this
THE question is. whether a bank
owning any of these classes of bonds
can deduct the value of same from Its
capital surplus or undivided proht
0fr n
- Ration. The answer to this question
depends mainly on the meaning of the
provision of section % of the general
tax law which provides for taxation OF
banks The part of said section APP
plicable to this question reads: stock
holders in banks and banking associa-
tions and loan investment companies
organized under the laws of this state
or the United States shall be assessed
and taxed on the true value of their
shares of stock in the city or town
shin where such bank, banking asso-
citation. loan or investment companies
are located. and the president, cashier.
or other managing officer thereof
shall. under oath. return to the asses
sor on demand, a list of the names of
the stockholders and amount and
value of stock held by each together
with the value of any undivided profit
or surplus; and said banks. banking
associations. loan or Investment COM
panies shall pay the tax assessed upon
said stock and undivided profit or sur
plus; and shall have a lien thereon.
until the same is satisfied; provided.
that If from any causes the taxes
levied upon the stock of any banking
association. loan or Investment COM
pany. shall not be paid by said cor
poration. the property of the individ-
ual stockholders shall be held liable
therefor
''It will be seen from the foregoing
that the banks are not assessed and
taxed on their capital, but that the
stockholders are assessed and taxed
on their shares of stock held therein.
THE tax Is not tax against the
bank but against the individual
shareholders on the value of their
shares and surplus. It is true that the
statutes provide that the bank shall
pay the tax on the shares and surplus.
but the bank is given a lien on the
stock and surplus for the tax thus adj
vanced bv it. and the individual prop
erty of the shareholder is held liable
for the tax If not paid by the bank.
TT will thus be seen that there is
no assessment and tax against the
bank which could be offset by munich
pal bonds.
1.-THE question then is resolved into
the further question. are the individ-
ual shareholders of bank stock en-
titled to have their shares exempted
from taxation in whole or in part by
reason of the fact that a part Of the
assets of the bank are not required to
he listed for taxation?
LAS a matter of fact. the bank lists
its stockholders. and the number and
value of their shares IN lieu of listing
any of its assets either exempt or not
exempt. These are assessed and taxed
and not the working canital of the bank.
National Bank VS. Fisher AZ Kansas
pc. Bank Of Santa Fe VS.. Buster so
Kansas. $50.
els the Individual shareholder enti-
IA IL
in relation to the construction Of stat
utes granting exemptions is we'll set
tied, and is stated thus by Desty in his