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Hudson Valley files appeal in mortgage tax case
POUGHKEEPSIE, N.Y. (8/3/10)--Attorneys for Hudson Valley FCU filed an appeal in a New York state appellate court, asking for reversal of a lower state court's dismissal of the credit union's challenge against the state's mortgage-recording tax (MRT). The challenge was based on the Federal Credit Union (FCU) Act's tax exemption for federal credit unions. The Poughkeepsie, N.Y.-based credit union's appeal was filed July 27 in the Appellate Division of the Supreme Court of New York. The original decision was rendered by New York Supreme Court Justice Judith Gische on May 14 and filed May 20. New York's Supreme Court is a trial-level court in that state. "Federal credit unions' immunity from taxation under the Supremacy Clause of the U.S. Constitution and the FCU Act prohibits the state's imposition of mortgage recording taxes on mortgages granted to secure loans made by federal credit unions to their members, regardless of how the Court of Appeals has characterized the tax for other purposes and in other contexts," said the appeal. The lower court "had reasoned in its dismissal that it was constrained to follow two decisions of the New York Court of Appeals that for purposes and in contexts unrelated to the impact of federal credit unions' immunity from state taxation, characterized the MRT as a tax on the 'privilege of recording' rather than as a tax on property. On this basis, the court determined that the state may continue to impose the tax," said the appeal document. The credit union had filed the suit on May 12, 2009 against the New York State Department of Taxation and Finance, Commissioner Robert L. Megna, and the State of New York (News Now May 24). It sought a declaratory judgment that the state may not impose the MRT on mortgages granted to secure loans made by the credit union because it is a federal credit union. Federal credit unions are federal instrumentalities and thus are immune from such state taxation under the Supremacy Clause of the U.S. Constitution, the credit union argued. It also noted that under the FCU Act, federal credit unions, their franchises and their intangible personal property, including mortgages, are exempt from "all federal, state, local and territorial taxation." "We hope and expect it will be a successful appeal for the benefit of the credit union and its members, and other federal credit unions and their members," Dale J. Lois of the Fishkill, N.Y.-based law firm Quartaratro & Lois, PLLC., one of the credit union's attorneys, told News Now Monday. Lois and Eli R. Mattioli of K&L Gates LLP law firm in New York City represent the credit union in the proceedings. Amicus briefs on behalf of the credit union were filed by the U.S. Department of Justice, Credit Union Association of New York, the Credit Union National Association, and the National Association of Federal Credit Unions.


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