Bulletin: NY000445

On May 14, 2010, New York Supreme Court Justice Judith Gische ruled that a mortgage made to a federal credit union is not exempt from the special additional mortgage recording tax. The opinion of the Court was based on previous cases, in which the courts had determined that the mortgage tax is not a tax on property but a "privilege," and therefore not part of the tax exemption granted to federal credit unions under the Federal Credit Union Act. She also dismissed the claim that the U.S. Constitution's Supremacy Clause exempted Hudson Valley FCU from the tax.

As of now, the NYS Dept. of Taxation and Finance ("DOF") is currently reviewing whether or not to continue this exemption. Based on the foregoing case, it appears that the exemption's days are indeed numbered but no official bulletin has yet been issued by the DOF terminating the exemption.

Please be advised that in the interim, when closing a Federal Credit Union mortgage please collect the special additional mortgage tax ("quarter point") at closing and kindly refund the monies if the mortgage is recorded prior to an official change in the DOF's policy.