In the case of Arkansas v. Farm Credit Services of Central Arkansas et al., 1996, the U.S. Supreme Court ruled that a state cannot impose sales tax on out-of-state lenders who make loans to in-state borrowers and secure those loans with in-state property. The State of Arkansas had imposed its sales tax on loan fees charged by out-of-state lenders, including Farm Credit Services (FCS), which made secured farm real estate and agricultural production loans to farmers within the state. FCS challenged this imposition as violating both federal law and the Commerce Clause of the U.S Constitution, arguing it was discriminatory against interstate commerce since local banks were exempt from such taxation under state law while they were not. The court agreed with FCS's argument stating that states could not discriminate between transactions on an interstate basis versus those occurring intrastate or favor one over another.

The dissenting opinion in the case of Arkansas v. Farm Credit Services of Central Arkansas et al., argued that the majority's decision to deny tax-exempt status to a federal instrumentality was inconsistent with previous rulings and could potentially disrupt other federally chartered, but privately owned entities. The dissenters believed that Congress intended for these instrumentalities to be exempt from state taxation when they created them, as this has been historically recognized by courts. They also pointed out that such an interpretation would not lead to any significant revenue loss for states since most federal instrumentalities are already subject to federal taxation. Furthermore, they expressed concern over potential negative impacts on those who rely on services provided by these entities due their increased financial burden caused by state taxes.