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N.Y. mortgage record tax appeal to be argued Sept. 4
NEW YORK  (7/31/12)--The Court of Appeals of the State of New York is scheduled to hear oral arguments on Sept. 4 in the appeal by Hudson Valley FCU of lower court decisions related to its challenge against the state's mortgage recording tax (MRT).

Earlier this month, the Poughkeepsie, N.Y.-based, $3.2 billion asset credit union filed a reply to an amicus brief from the American Bankers Association and the New York Bankers Association in which the banks argued that federal credit unions should not be exempt from the tax. (Use the link to related story: Bank associations file amicus brief, back mortgage recording tax in the May 21st issue of News Now.)

In its reply, filed July 10, the credit union seeks reversal of the lower courts decisions that the credit union pay the tax and  noted that the banking associations' arguments "are meritless." 

The associations "have long opposed the tax-exempt status enjoyed by federal credit unions under federal law," said the court document. Hudson Valley attacked banks' argument that it was seeking a "novel interpretation" of the exemption to gain a "competitive business advantage."

"Any objective analysis of these arguments serves to illuminate and underscore the exact opposite of what the amici contend--that the Federal Credit Union Act of 1934, as amended, affords Hudson Valley and other federal credit unions constitutional as well as statutory immunity from New York's tax on mortgages, that the contrary determination of the court below is wrong as a matter of law, and that the dismissal of Hudson Valley's complaint should therefore be reversed," Hudson Valley said.

Hudson Valley made three arguments in its response:

  • Its interpretation of the law is consistent with the statute's prior construction and Congress' finding that federal credit unions are exempt from taxation because they are unlike banks and other for-profit lenders.
  • The Federal Credit Union Act, in authorizing federal credit unions to make mortgage loans and exempting federal credit unions and their property from taxation, provides a "clear statutory basis for Hudson Valley's claim of immunity from New York's mortgage tax."
  • Supreme Court precedent and other authority establish that an analysis of federal credit unions' constitutional immunity from taxation is appropriate in deciding the impact of the code on the tax at issue.
(Use the link to related story: Bank associations file amicus brief, back mortgage recording tax in the May 21st issue of News Now.)

Hudson Valley has appealed two lower courts' decisions that denied its challenge to the MRT. It had filed suit on May 12, 2009, in the New York Supreme Court, a lower trial court, against the New York State Department of Taxation and Finance.

The lower court dismissed the case, saying MRT was a tax on the "privilege" of filing the mortgage under state law. An Appellate Division upheld the lower court ruling, and the credit union appealed. The New York Court of Appeals agreed on Oct. 18, 2011, to hear the appeal.

Hudson Valley's lawsuit has been supported in various amicus briefs from the Department of Justice, Federal Housing Finance Agency, the Credit Union Association of New York, the Credit Union National Association and the National Association of Federal Credit Unions.


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