The U.S. Justice Department has sided in favor of a credit unionlocked in a legal battle against its state.
|The $2.7 billion Hudson Valley Federal Credit Union has takenthe State of New York to court over a tax that the state applies torecording mortgages. The credit union contends that as a federalcredit union, it should not have to pay the state tax and theJustice Department agreed in its filing with the court.
|Federally chartered credit unions are "instrumentalities of theUnited States and may not be taxed absent a specific waver," theJustice Department argued in its filing. "Therefore, unless theState of New York can demonstrate that Congress has specificallywaived immunity for the mortgage tax at issue, the tax is barred bythe doctrine of sovereign immunity," the Justice Departmentadded.
|CUNA and NAFCU have weighed in on the issue in favor of the CUas well. The court has said it will hear oral arguments on the caseon April 13.
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