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Constructive placement. Since the law allows the use of the fiction that personal property is not in the place where it is physically located for the purpose of assessing an ad valorem tax, the home state could legally apply a reverse fiction in finding its legal presence for tax purposes in a place where it is not. The application of this fiction would, however, have practical drawbacks, especially where the tax assessor must see the property in order to set a tax.

Jointly Held Personal Property/Community Property. Non-military spouses, if included on the title of a taxable personal property item (e.g., a boat, trailer, or motor vehicle) as joint owners or having community property ownership, probably defeat the protection from host state taxation of the personal property provided by Section 514. Most states take the position that since the SSCRA only protects property owned solely by the service member from state income taxation, jointly owned personal property may be taxed by the state of domicile as well as the state of actual situs. No appellate court has yet ruled on whether a joint owner is entitled to personal property tax relief under the SSCRA. Taxation rates vary from half to full value

Property located on federally controlled lands. Regardless of whether the property is owned by the service member or his/her dependent, if the property is located on an installation subject to the exclusive jurisdiction of the Federal government, the state may not impose an ad valorem personal property tax. Exclusive federal jurisdiction means "exclusive legislative jurisdiction" and is applied to situations wherein the Federal Government has received, by whatever method, all the legislative authority of the state. Usually the state has reserved only the right to serve process regarding activities that occurred off the land involved. The fact that the post or installation exists does not automatically mean the installation is subject to exclusive federal jurisdiction. On the contrary, the current trend is away from exclusive jurisdiction to arrangements in which the state will have more authority. Quite often, the type of jurisdiction may vary from one place to another on the same reservation.

Motor vehicles. Section 514(2)(b) provides that the term taxation includes "licenses, fees, or excises in respect to motor vehicles or the use thereof" but only if a license, fee, or excise required by the home state has been paid. In California v. Buzard, the Supreme Court held that even though the law of the home state exempted a resident from payment of a license, fee, or excise when the vehicle was not driven in the home state, the service member would have to register and license his vehicle in his home state in order to qualify for the exemption from payment of a license, fee, or excise tax in the host state. If a service member does not pay to license and register his car in his home state, the host state may require him to pay in order to register his vehicle in the host state. The service member does not, however, have to pay the entire amount assessed if a portion of the license, fee, or excise exceeds the amount necessary to defray the cost of issuance and administration. The Court also held in Buzard that the excessive amount is an ad valorem tax that may not be imposed by the host state upon a service member's personal property. This specifically includes motor vehicles.

The motor vehicle, then, may fit into two categories. First, as a piece of tangible non-business property it is exempt from ad valorem taxes regardless of the authority or desire of the host state to tax it. Second, as a machine that moves on the streets and highways of the host state, it is subject to the police power of the host state. A state may exercise its police power to require a service member to register a vehicle in its jurisdiction if, and only if, the service member has not registered the vehicle in the home state. Where the registration fee or license may properly be exacted by the host state, any portion assessed as revenue need not be paid.

A similar rule applies to the requirement for municipal registration. So long as the requirements of the home state are met, the political subdivision has no greater right than the host state to impose its own requirements. A service member need not, however, pay a similar tax or fee to the state of domicile in order to avoid municipal revenue-raising taxes in the host state. Nonresident service members are exempt from paying revenue-raising taxes regardless of whether they paid similar taxes in their state of domicile.

Mobile homes. If the host state treats a mobile home as tangible nonbusiness personal property, the mobile home has the same protection as a motor vehicle or any other such property with regard to ad valorem taxes imposed by the host state. If the law of the host state also classifies the mobile home as a motor vehicle, registration with its accompanying license, fee, or excise may be imposed if the service member has not complied with the registration requirements of his home state. The same restrictions prohibiting the state from imposing an ad valorem tax in the form of a license, fee, or excise also apply.

By making certain modifications to a mobile home, such as removing wheels or installing plumbing and electrical connections, an owner may make the mobile home relatively affixed to the land. In some states, the mobile home may then be treated as a piece of real property. However, state labels are not conclusive. In United States v. Chester Co. Bd of Assess, the court determined that the scope of the Act raises a federal question which does not depend on the "divers interpretations by the several states of what is personal or real property."

Intangible nonbusiness personal property. This category includes stocks, bonds, and bank deposits. Subject to taxation are the income derived from this property and the value of the property itself.

(1) Income. Traditionally, the owner's legal domicile has taxed income from intangible property. In this regard, the authority to impose an income tax on intangibles is independent of the authority to impose an ad valorem tax on intangibles.

(2) Ad valorem tax. Intangibles have as their taxable situs the service member's domicile. While generally not the practice, there appears to be no legal obstacle to imposition of such a tax on dependents' intangible nonbusiness property by virtue of their acquired residence.

(3) Transfer taxes. No court has addressed relief from payment of state or local taxes on the transfer of securities, but it is doubtful that Congress intended to preclude this type of tax. This conclusion is supported by the rule in the Sullivan case.

Motor vehicle operator permits. The SSCRA does not preclude states from requiring persons who live within their borders to acquire a driver's license. Many states, however, allow service members to retain their license if issued from their domicile.

Business property. Whether tangible or intangible, owned by the service member or his/her dependent, section 514 specifically excludes property used in a business or trade from protection under the Act. Therefore, the value and income derived from business property may properly be taxed in the state where the business or trade is conducted. The host state may also exact revenue producing licenses, fees, and excises. An automobile used by a dependent to drive to and from work, however, should not be considered business property.

Included in this category is the income derived from the rental of real property which, for example, was purchased at the last duty station and rented out in lieu of selling it upon reassignment. If the home is located in a state other than the home state, the service member should investigate whether or not the home state treats this income as taxable.

Ad valorem tax on leased motor vehicles. Service member leased vehicles may be taxed by host state and local governments, since the lessor is the owner of the leased vehicle, the SSCRA provides no protection from such taxation. Service members may have limited recourse if this provision is not disclosed as required by Federal Reserve Regulation M, Federal Consumer Leasing Act.

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Above Information Courtesy of United States Army JAG Corps