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Hollingsworth LLP filed an amicus brief in May 2012 on behalf of the American Bankers Association and the New York Bankers Association in the case of Hudson Valley Federal Credit Union v. New York Department of Taxation and Finance (N.Y. May 17, 2012).  The amicus brief supported the New York Tax Department’s position that Hudson Valley FCU (and all other federal credit unions) are not exempt or immune from paying New York’s mortgage recording tax when new mortgage loans are made by credit unions to buy property in New York State.  In the pending appeal, Hudson Valley FCU is arguing that the Federal Credit Union Act exempts federal credit unions from paying most federal and state taxes, including New York’s mortgage recording tax.

In the amicus brief, Hollingsworth LLP counsel pointed out that the mortgage recording tax at issue is paid by every other financial institution lender in New York (usually by passing the cost on to the borrowers) and that Hudson Valley is actually seeking an unwarranted competitive advantage over all of those other lenders.  The brief also analyzes and rejects Hudson Valley’s expansive view of the Federal Credit Union Act, which does not exempt federal credit union “mortgages” or “loans” from state taxation.  On behalf of the two banking association amici, the brief also notes that if Hudson Valley wants the kind of broad tax exemption described in its filings, it should be pursuing legislation — not litigation.