Opinion ID: 1304942
Heading Depth: 2
Heading Rank: 1

Heading: City National's Banking Practices

Text: City National introduces its arguments with a description of the growth it experienced beginning in the mid-1980's, which led to a major reorganization of both management and operations in 1996. At such time, many banking related functions were moved from various branch bank locations to its Central Office locations in Scary Creek and Cross Lanes. Examples of tasks that were performed at these two centralized locations [2] include loan processing, risk management, collection, generation of account statements, regulatory compliance, and investment activities. In further explanation of how its banking business has changed, City National states that when a loan is closed at a branch location, such as in Beckley, all loan files are forwarded to and retained by personnel at the Central Office. Based on the manner in which loans, as well as numerous other banking matters are now handled at its Central Office, the Bank argues that both loan interest income and investment income are not received at Beckley and are [therefore] not subject to Beckley B & O Tax. [3] City National concedes, however, that all trust department fees and safety deposit fees; service charges for checking accounts; NSF charges; money orders; and bank checks that are charged by its five Beckley branch locations are received at Beckley and, thus, fully subject to the Beckley B & O tax. Beginning with the second quarter of 1999, City National changed the manner in which it reported taxable gross income in the banking classification for its Beckley B & O tax return. At such time, the Bank ceased reporting certain income generated from its loans and investments based on its position that such funds were not being received at Beckley, but instead at its Central Office locations where such amounts were being processed. Through this self-imposed reporting change, [4] the City realized a 90% decrease in the taxes reported by the Bank for its five Beckley branch offices in comparison to prior reporting periods. [5]