CU Loses NY Court Case on Mortgage Tax
Despite support from the federal government, the Hudson Valley FCU lost a battle in a New York State trial court about whether it has to pay a mortgage-recording tax.
New York Supreme Court Justice Judith Gische ruled that based on previous cases, the courts had determined that the tax is not a tax on property but a "privilege," and therefore not part of the tax exemption granted federal credit unions under the Federal Credit Union Act. She also dismissed the claim the U.S. Constitution's Supremacy Clause caused Hudson Valley FCU to be exempt from the tax.
She issued the ruling on May 14 but filed it with the court clerk last week.
Gische wrote that she was "constrained to follow," existing precedent by New York's highest court-the Court of Appeals-in this case, even though two U.S. Supreme Court decisions "seemingly lend support to Hudson Valley's argument that New York State's MRT [mortgage-recording tax] is, likewise, a tax on 'property.'"
CUNA and NAFCU both filed amicus briefs on behalf of Hudson Valley FCU as did the U.S. Department of Justice.
CUNA, NAFCU and the Credit Union Association of New York all said they are reviewing the decision and haven't decided if they plan to appeal.