Legal Question in Tax Law in New Jersey

Does State Income Tax Violate Federal Law

18 USC 8 TITLE 18 PART I CHAPTER 1

Sec. 8. - Obligation or other security of the United States defined The term ''obligation or other security of the United States'' includes ... Federal Reserve notes, Federal Reserve bank notes, coupons,...

12 USC 411 TITLE 12 CHAPTER 3 SUBCHAPTER XII

Sec. 411. - Issuance to reserve banks; nature of obligation; redemption

Federal reserve notes,... The said notes shall be obligations of the United States ...

31 USC 3124 TITLE 31 SUBTITLE III CHAPTER 31 SUBCHAPTER II Sec. 3124. - Exemption from taxation

(a) Stocks and obligations of the United States Government are exempt from taxation by a State or political subdivision of a State. The exemption applies to each form of taxation that would require the obligation, the interest on the obligation, or both, to be considered in computing a tax, except -

Since federal reserve notes are obligations of the United States and therefor is exempt from taxation by a State or political subdivision of a State, and can not be used in computing a tax, nor can the interest be used in computing a tax, I can see no lawfull way for the State of New Jersey to have taxed my income which was only in the form of federal reserve notes.


Asked on 9/07/02, 3:11 am

1 Answer from Attorneys
Walter LeVine Walter D. LeVine, Esq.

Re: Does State Income Tax Violate Federal Law

This is correct, no US obligations are taxable by a state. If your only income was from US obligations, this should not have been reported nor a tax paid. If you inadvertently included it and paid a tax file an amended return to claim your refund.

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Answered on 9/09/02, 10:04 am


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