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Sept. 5, 2012 – Parties in the Hudson Valley FCU tax suit in New York lodged final arguments Tuesday in the New York Court of Appeals, the state’s highest court, but judges did not say when they will decide whether the state may assess mortgage recording tax on federal credit unions.

In arguments that lasted about 20 minutes, counsel for Hudson Valley, Eli Mattioli, focused on federal credit unions’ statutory exemption from all taxes related to real property. The state, represented by Brian Sutherland, stood by its argument that the state’s mortgage recording tax isn’t a real property tax on the credit union but a tax on the transaction.

The judges were interested in who actually pays the tax and how a deficiency would be addressed if it found that federal credit unions should not pay it. They queried both sides on the matter of federal credit unions’ status as federal instrumentalities, producing an exchange that indicated this point is not central to the Hudson Valley case.

A lower court has rejected Hudson Valley’s argument for exemption from the state’s mortgage recording tax. Hudson initiated its challenge in 2009. NAFCU has filed amici briefs at various stages throughout in its effort to protect credit unions’ federally tax-exempt status and will continue to monitor developments.