Hudson Valley FCU Faces Lawsuit on Taxes
Hudson Valley Federal Credit Union, which is suing the State of New York over the legality of the mortgage recording tax, is itself the subject of a lawsuit from members who had to pay the tax.
On April 29, a group of members who obtained mortgages from Hudson Valley FCU filed a class-action lawsuit in U.S. District Court in New York alleged that the credit union and several title companies didn't tell them they don't have to pay the tax. It alleges that the tax has been improperly levied for decades. The credit union is headquartered in Poughkeepsie, N.Y. and has assets of $2.7 billion.
Hudson Valley FCU, which has sued New York State in state court, in a separate administrative action is seeking a refund of approximately $1.8 million it paid in mortgage recording taxes.
Last month, a New York State trial court ruled against Hudson Valley FCU in its suit against New York State, though lawyers for the credit union have said they plan to appeal. Hudson Valley FCU has been backed by the U.S. Department of Justice in this case.
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.
Attorneys for the plaintiffs didn't return a phone call seeking comment on the class-action lawsuit.