Newsroom
April 07, 2012
Hudson Valley files reply in N.Y. tax case
April 9, 2012 – Hudson Valley FCU filed a response last week to the state of New York's legal argument that it is permissible for the state to collect a mortgage recording tax from the credit union, calling that position "unlawful and unconstitutional."
In a brief filed March 19, the state of New York said the Federal Credit Union Act does not bar collection of recording taxes on mortgages securing federal credit union loans because the tax "is not aproperty tax."
Originally, Hudson Valley filed suit in 2009 challenging the state's levy of a mortgage recording tax on mortgages given to secure loans made by federal credit unions. NAFCU, focusing on upholding credit unions' federal tax exemption, has filed amici briefs at various stages supporting the credit union.
Hudson Valley has filed repeated appeals over the tax. New York state continues to argue that the credit union's request has no statutory or constitutional basis.
In its response filed last week, Hudson Valley says that the state's judgment was erroneous and should be reversed. Its reasoning: Hudson Valley and other federal credit unions are federal instrumentalities, and the Federal Credit Union Act exempts such entities, their assets and operations from all federal, state and local taxation not expressly and specifically permitted by Congress.
Hudson Valley points out that Congress has not waived this broad immunity with respect to state mortgage recording taxes. It argues that federal law, therefore, prohibits these taxes from being imposed on federal credit unions such as Hudson Valley.
The credit union also says the Department of Taxation and Finance equates federal credit unions "with precisely the kinds of state entities that are exempted from the tax on the ground that the tax operates as a direct tax on their mortgages, tantamount to a tax on the lenders themselves." The credit union argues that the court "should direct entry of a declaratory judgment to that effect."
NAFCU, which has filed amici briefs supporting Hudson Valley, will continue to monitor any new developments in the case.
In a brief filed March 19, the state of New York said the Federal Credit Union Act does not bar collection of recording taxes on mortgages securing federal credit union loans because the tax "is not aproperty tax."
Originally, Hudson Valley filed suit in 2009 challenging the state's levy of a mortgage recording tax on mortgages given to secure loans made by federal credit unions. NAFCU, focusing on upholding credit unions' federal tax exemption, has filed amici briefs at various stages supporting the credit union.
Hudson Valley has filed repeated appeals over the tax. New York state continues to argue that the credit union's request has no statutory or constitutional basis.
In its response filed last week, Hudson Valley says that the state's judgment was erroneous and should be reversed. Its reasoning: Hudson Valley and other federal credit unions are federal instrumentalities, and the Federal Credit Union Act exempts such entities, their assets and operations from all federal, state and local taxation not expressly and specifically permitted by Congress.
Hudson Valley points out that Congress has not waived this broad immunity with respect to state mortgage recording taxes. It argues that federal law, therefore, prohibits these taxes from being imposed on federal credit unions such as Hudson Valley.
The credit union also says the Department of Taxation and Finance equates federal credit unions "with precisely the kinds of state entities that are exempted from the tax on the ground that the tax operates as a direct tax on their mortgages, tantamount to a tax on the lenders themselves." The credit union argues that the court "should direct entry of a declaratory judgment to that effect."
NAFCU, which has filed amici briefs supporting Hudson Valley, will continue to monitor any new developments in the case.
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