Bankers Trust New York Corp. v. Department of Finance

Determination of the Department of Finance of the City of New York dated June 12, 1990, which, after a hearing, denied the petitioners’ claim for a refund of New York City Financial Corporation Tax in the amount of $3,997,479 plus interest for the tax year ending December 31, 1976 (transferred to this Court by order of Supreme Court, New York County [Jacqueline W. Silbermann, *551 J.] entered on or about October 24, 1990), unanimously confirmed and the petition dismissed, without costs.

New York Laws of 1966 (ch. 772, § 1) * authorizes “any city having a population of one million or more * * * to adopt and amend local laws imposing * * * taxes on * * * financial corporations”. Section 12 (1) of the Model Local Law, immediately following the enabling statute (1966 McKinney’s Session Laws of NY, at 974), expressly states that a “[t]ax based on net income” be imposed "[fjor the privilege of doing business in the city”. The New York City Banking Corporation Tax Law (Administrative Code of City of New York § 11-639 [a] [formerly § R46-37.1 [a]) tracks the language of the enabling legislation’s Model Local Law. While it does not employ the words “franchise tax”, it functions as such a tax nonetheless, and equivalent language is found in the section, namely, “[f]or the privilege of doing business in the city in a corporate or organized capacity”. (See, Woodside Sav. & Loan Assn. v Gallman, 73 Misc 2d 357 [Sup Ct, NY County 1972], affd on opn of Korn, J., at Special Term 34 NY2d 674 .) Even though measured by income, the New York City Banking Corporation tax is not to be viewed as a tax on income. (See, First Am. Natl. Bank v Olsen, 751 SW2d 417, 422 [Tenn 1987].) For that reason, it is exempt from the provisions of 31 USC § 3124 (a) (formerly 31 USC § 742 ; Rev Stat § 3701).

31 USC § 3124 (a) does not limit the States’ taxing authority so that only one such tax can be imposed; a number of acceptable forms of taxation can be imposed concurrently within the exception of the federal immunity statute. (See, First Am. Natl. Bank v Olsen, supra.) Concur — Carro, J. P., Ellerin, Wallach, Kupferman and Kassal, JJ.

Entitled, "City Corporate Business and City Unincorporated Business Income Tax”.