New York Dismisses CU Challenge to Mortgage Tax

Lawyers for Hudson Valley Federal Credit Union said they plan to appeal the recent New York court ruling rejecting its challenge to the state's mortgage recordation tax. "Yes, we will appeal," said Dale Lois, an attorney representing the $2.8 billion former IBM employees credit union located in nearby Poughkeepsie. The credit union's lawyer said the speedy decision by the state Supreme Court may work to their favor by getting them to the state's appeals court faster to decide the decision, which could save credit unions millions of dollars in taxes. (The case was filed in November 2009.) The state court ruled that even though federal law defines federally chartered credit unions as instrumentalities of the federal government and thus exempt from state taxes, the mortgage recordation tax is not a tax on credit unions or a tax on borrowers, but on the "privilege of recording" a mortgage, as was argued by the state's Department of Taxation and Finance. The stakes are big for credit unions which pay millions of dollars in mortgage recording taxes to the state each year. Hudson Valley has requested a rebate of $1.8 million of taxes paid over the last three years.