G. L. c. 63, §§ 10, 11 inc.] SECTION 10. The assessors of a town, upon request of any person resident therein who is the owner of any shares in such banks which, under clauses seventeenth and eighteenth of section five of chapter fifty-nine would be entitled to exemption from taxation, shall give to him a certificate stating such fact; and the town treasurer, upon request therefor, and the deposit with him of such certificate, shall pay to such owner the amount so collected in respect of such shares, immediately upon the allowance made to such town under this chapter.

The object of the foregoing statutes is to provide the machinery by which certain classes of individuals and corporations, which are exempt from direct taxation on other property, may establish their exemption with respect to shares in national banks. All shares in national banks, by whomsoever owned, are taxed in the first instance; but the tax is refunded to the individuals and corporations described in the foregoing sections.

SAVINGS BANKS, SAVINGS DEPARTMENTS OF TRUST COMPANIES AND CO-OPERATIVE

BANKS

Excise on Savings Banks and Savings Departments

SECTION 11. Every savings bank and every trust company having a savings department, as defined respectively in chapters one hundred and sixty-eight and one hundred and seventy-two, shall pay to the state treasurer, on acount of its depositors, an annual tax of one half of one per cent, which shall be levied on the amount of the deposits in a savings bank, and on the amount of such of the deposits in the savings department of a trust company as do not exceed in amount the limits imposed upon deposits in savings banks by section thirty-one of chapter one hundred and sixty-eight, to be assessed and paid as follows: one-fourth of one per cent shall be assessed by the commissioner upon the average amount of such deposits for the six months preceding May first, and paid on or before May twentyfifth; and a like percentage shall be assessed upon the average amount of such deposits for the six months preceding November first, and paid on or before November twenty-fifth.

Prior to 1862 there were no special provisions of law relating to the taxation of savings banks, and savings banks, like

[G. L. c. 63, § 12 other corporations, were taxed for their real estate in the town where it was situated but were not taxed for their personal property; and the depositors were taxed for the amounts of their deposits as "money at interest" in the towns where they respectively.dwelt.1 In 1862 a statute was enacted, imposing an annual tax upon savings banks to be paid to the commonwealth based upon the amount of the deposits, and exempting the deposits from other taxation. The validity of this statute was contested in the courts and it was held that it could not be sustained as a property tax; but as an excise on the franchise of the bank it was valid, and the amount of the deposits was held to be a proper measure of the value of the franchise."

The "deposits" upon which the tax is based include only the amounts deposited in the bank and dividends thereon payable to depositors and do not include the guarantee fund and undivided profits; in other words the tax is based upon the amount credited to depositors and not upon the market value of the assets of the bank.3

Exemption of Portions of Deposits

SECTION 12. So much of said deposits shall be exempt from taxation under the preceding section as is invested in any of the following: (a) Real estate used for banking purposes.

(b) Loans secured by mortgage of real estate taxable in this commonwealth.

(c) Real estate the title of which has been acquired by foreclosure or purchase under clause twelfth of section fifty-four of chapter one hundred and sixty-eight, for five years after the title thereof is vested in the corporation.

(d) Bonds or certificates of indebtedness of the United States. (e) Bonds or certificates of indebtedness of the commonwealth issued after January first, nineteen hundred and six.

(f) Bonds, notes and certificates of indebtedness of any county, fire district, water district, light district, improvement district, city or town in the commonwealth, issued on or after May first, nineteen hundred and eight, stating on their face that they are exempt from taxation in Massachusetts.

'Worcester County Institution for Savings v. Worcester, 10 Cush. 128 (1852). * Commonwealth v. The People's Five Cents Savings Bank, 5 Allen 428 (1862). Suffolk Savings Bank, Petitioner, 151 Mass. 103 (1890).

G. L. c. 63, §§ 12, 13]

(g) Shares of stock of trust companies organized under the laws of the commonwealth.

After the enactment of the excise tax on savings banks the personal property of such banks continued to be exempt from direct taxation,1 but the real estate of such banks has remained taxable in the town in which it is situated. So far as the constitutional rights of the bank are concerned, as the tax is an excise and not a property tax, the state is not bound to grant a deduction based on the investment of the deposits in property which is itself taxed or in property which the state has no power to tax, such as United States bonds;2 but the state has consistently attempted to deal fairly with institutions for savings and has allowed the deductions set forth in section twelve, with a view to avoiding what in effect amounts to double taxation or to the taxation of securities which would be exempt in the hands of individual investors. So far as these deductions relate to property which is taxed in some other way, since they do not constitute the grant of an exemption, but an attempt to avoid double taxation, they are liberally construed;3 and when a savings bank erects a building of more than one story in height, and occupies only the first floor for banking purposes, and rents the remaining portion of the building to various tenants, if it appears that the area of the building is not unnecessarily great, and that the business of the bank cannot be conveniently conducted on different floors, the deduction for the purposes of the excise tax should be based on the value of the entire building.*

In the case of the savings department of a trust company, the deductions are to be computed pro rata between the amount of deposits subject to the excise tax and the amount of those which, because they exceed the limitations upon deposits in savings banks, are not subject to the excise tax."

Returns of Amount of Deposits

SECTION 13. Every savings bank and every trust company having a savings department shall semi-annually, on or before May tenth

1G. L. c. 59, §5, cl. 16, supra, page 208.

"Commonwealth v. Provident Institution for Savings, 12 Allen 312 (1866); Provident Institution v. Massachusetts, 6 Wall. 611 (1867).

'Suffolk Savings Bank, Petitioner, 149 Mass. 1 (1889).

'Suffolk Savings Bank, Petitioner, 149 Mass. 1 (1889).

'Old Colony Trust Co. v. Commonwealth, 220 Mass. 409 (1915).

[G. L. c. 63, §§ 13-15 and November tenth, make a return to the commissioner, signed and sworn to by its president and treasurer, of the amount of its deposits if a savings bank, and if a trust company of the amount of deposits in its savings department, on the first day of each of said months, and of the average amount of such deposits for the six months preceding each of said last mentioned days. A corporation neglecting to make such return shall forfeit fifty dollars for each day during which such neglect continues. If it wilfully makes a false statement in such return it shall be punished by a fine of not less than five hundred nor more than five thousand dollars.

There is nothing in this section of the statutes which requires the commissioner to accept as true a return filed in accordance with its provisions, or which precludes him from ascertaining the truth through some other source of information.1

Tax Exempt Investments in Savings Department Not Basis of Deduction from Other Taxes

SECTION 14. No investment of deposits in the savings department of any trust company exempt in any year from the tax imposed by section eleven shall be in the same year a basis for any deduction allowed in computing any other tax which trust companies are required by law to pay.

Exemption of Deposits from Other Taxes

SECTION 15. All deposits taxed under section eleven shall be otherwise exempt from taxation in any year in which said tax is paid.

One of the essential objects of the original act imposing an excise on savings banks was to provide that the deposits should not be subject to local taxation as money at interest in the hands of the depositors. The deposits in savings banks incorporated in this commonwealth have continued to be exempt from any taxation other than the tax on the franchise of the bank by which they are indirectly reached;1 and the dividends on such deposits are not subject to the state income tax. In 1909 provision was made for the taxation of the savings departments of trust com

'Old Colony Trust Co. v. Commonwealth, 220 Mass. 409, 413 (1915).

1 Deposits are not subject to local taxation, G. L. c. 59, §5, cl. 28, supra, page 214.

2 G. L. c. 62, §1, subsection (a) clause first, supra, page 439.

G. L. c. 63, §§ 15, 16]

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panies in the same manner as savings banks; but as there is no such limitation upon the amount which may be deposited by any one individual in the savings department of a trust company as is applicable to savings banks, this enactment gave the trust companies an advantage over the savings banks; and in 1911 it was provided that the franchise tax and the corresponding exemption from direct taxation should thereafter apply only to such of the deposits in savings departments as did not exceed the limit placed by law upon the deposits in savings banks. It is to be noted that the distinction was made between deposits which exceeded and those which did not exceed the statutory limit upon savings bank deposits; and that the whole of a deposit which exceeded the statutory limit was made locally taxable and not merely that part of it which exceeded such limit. This distinction has been retained in the income tax law; and the whole of the interest on a deposit in a savings department which exceeds the statutory limit is subject to the income tax, and the whole of such deposit is exempt from the excise tax on the trust company in the savings department of which it is deposited."

Effect of Incapacity to Do Business

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SECTION 16. Whenever a bank, as defined in section one of chapter one hundred and sixty-seven, is restrained from doing business by an injunction issued by any court, or is in the hands of the commissioner of banks under said chapter, the tax payable by the bank under section eleven, as computed on May first or November first next ensuing, after the bank is incapacitated from doing business as aforesaid, shall be reduced by the same proportion which the number of business days during the six months next preceding the said May first or November first on which the bank was thus incapacitated bears to the total number of business days in the said six months; and thereafter the bank shall be relieved from paying taxes under said section so long as it continues to be incapacitated from so doing business.

See Old Colony Trust Co. v. Commonwealth, 220 Mass. 409 (1915); J. S. Lang Engineering Co. v. Commonwealth, 231 Mass. 367 (1918). A pass-book in the savings department of a trust company is a "security" within the meaning of the statutes imposing a tax on the franchises of corporations. J. S. Lang Engineering Co. v. Commonwealth, 231 Mass. 367 (1918).