October 5, 1984

You inquire whether a federal mutual savings bank with its principal place of business in New York is subject to taxation by Massachusetts. You state that the bank's only contact with Massachusetts is that loans extended in New York are secured by real property located in Massachusetts, that, inspection is made of the properties prior to extension of the loan, and that the mortgages are duly recorded locally in Massachusetts.

Certain banks are subject to taxation under Chapter 63 of the Massachusetts General Laws.

A tax measured by net income is imposed on certain banks as specified by statute (G.L. c. 63, §§ 1, 2). Banks subject to this tax include:

Any bank, banking association or trust company, including all banks for cooperatives organized under the United States Farm Credit Act of nineteen hundred and thirty-three, doing business within the commonwealth, whether of issue or not, existing by authority of the United States or of a foreign country, or of any law of the commonwealth not contained in chapter one hundred and sixty-eight to one hundred and seventy-one, inclusive, and chapters one hundred and seventy-three and one hundred and seventy-four, and any corporation authorized by section one of chapter one hundred and seventy-two A to do the business of a banking company. (G.L. c. 63, § 1).

A tax measured by combined net operating income and deposits is imposed on
Every savings bank as defined in chapter one hundred and sixty-eight, every co-operative bank as defined in chapter one hundred and seventy and every state or federal savings and loan association and every federal savings bank located in the commonwealth... (G.L. c. 63, § 11).

Based on the foregoing, it is ruled that a federal mutual savings bank located in New York is not subject to tax by Massachusetts on its activities described herein under the above provisions of law.

Very truly yours,

Commissioner of Revenue

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LR 84-89