Are production credit associations taxpayers?

Agricultural lenders and state tax administrators nationwide have anxiously awaited the outcome of a US Supreme Court case known as State of Arkansas vs. Farm Credit Services of Central Arkansas, PCA, et al. On June 2, 1997, the high court unanimously decided to reverse a prior ruling in the Eight Circuit Court of Appeals, which held that production credit associations, as instrumentalities of the federal government, are constitutionally immune from the imposition of Arkansas state sales and use tax. This decision is of particular significance, resulting in several case reversals. One such reversal involved a federal credit union employees' claim for an exemption from a transient hotel tax. Another case reversal dealt with a federal judge's claim of immunity from an Alabama privilege tax. This trend indicates that subsequent claims of tax immunity will be subject to judicial scrutiny.