Members Withdraw Lawsuit Challenging New York Mortgage Tax

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POUGHKEEPSIE, N.Y. – A group of Hudson Valley FCU members has dropped its class action suit challenging the credit union’s collection of the state’s mortgage transfer tax because the credit union lost its own challenge to the state levy.

Lawyers for the members group said the decision by the state court rejecting Hudson Valley’s challenge to the tax made the members’ suit impractical.

The members filed the suit as the credit union’s legal challenge was pending, claiming that millions of dollars in transfer taxes were collected from them illegally because the Federal CU Act prohibits taxes assessed federally chartered credit unions. Ironically, the credit union was counting on the same argument to avoid paying the tax to the state Department of Taxation and Finance.

The state Supreme Court rejected the credit union’s challenge in May, rendering the members’ suit problematic, at best.

The credit union has appealed the state judge's ruling dismissing its challenge.

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