Could a property manager make tax-free purchases for assets held in FDIC receivership without registering as an FDIC agent?

Plain-English summary

A company managed property that was an asset of a savings institution held in Federal Deposit Insurance Corporation receivership. The manager asked what it needed beyond the FDIC's general exemption certificate to make tax-free purchases for the property.

The Comptroller said the manager did not have to register as an FDIC agent with the Comptroller's office. It did need a written FDIC agreement authorizing purchases as the FDIC's agent and documentation that FDIC held title to the managed property.

With those documents kept in its business records for audit, the manager could issue exemption certificates for tax-free purchases within the agency agreement's scope.

The letter explained that Texas and federal law exempted FDIC and other federal entities from Texas tax, including purchases through authorized federal purchasing agents. A company without duly authorized purchasing-agent status could not claim the federal government's exemption.

What this means for you

A federal entity's exempt status did not automatically pass through to a property manager. The manager needed written purchasing authority tied to property whose title was held by the federal entity.

Common questions

Did the manager have to register with the Comptroller as FDIC's agent? No.

What two records were required? A written FDIC agency agreement and proof that FDIC held title to the property.

Could every purchase be exempt? Only purchases within the scope of the written agreement.

Could an unauthorized company use FDIC's exemption? No.

Citations and references

The letter referred generally to Texas and federal law but did not identify a numbered statute or administrative rule.

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/9107L1121B01

Original ruling text

July 22, 1991

Dear ***:

Thank you for your recent letter. As I understand it, your
company manages properties that are assets of ABC Savings.
Apparently, the Federal Deposit Insurance Corporation (FDIC)
currently holds ABC Savings in receivership. The FDIC has
provided your company with a copy of an exemption certificate
reciting that it is exempt from state taxation by federal and
Texas law. You ask what additional steps you must take in
order to make tax-free purchases on behalf of FDIC.

First, there is no requirement that you register with this
office as an agent of FDIC. Rather, you must have a written
agreement with FDIC that authorizes you to make purchases as
an agent of the FDIC, and you must have documentation that
the FDIC holds title to the property you manage. If you
were to obtain the required documentation, you could issue
an exemption certificate to make tax-free purchases that
fall within the scope of the agreement. You should keep the
agreement with your business records, in case of audit.

Texas and federal law exempt the FDIC and other federal
government entities from payment of Texas tax. This
exemption applies both to purchases made directly by the
federal government, and by authorized purchasing agents of
the federal government. But a person or company that is not
a duly authorized purchasing agent of the federal government
cannot legitimately claim a tax exemption that is available
only to the federal government.

This opinion is based on the facts presented. Different
facts, though similar, might lead to different answers. If
you have further questions, feel free to write or call me at
1-800-252-5555, ext. 3-3889.

Sincerely,

John Christian
Attorney
Tax Administration