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FHFA Resists Transfer Taxes in Illinois and Files Suit

The ""Federal Housing Finance Agency"":http://www.fhfa.gov/ filed ""suit"":http://www.fhfa.gov/webfiles/24027/RUTHERFORD_COMPLAINT_wEXHIBITS.pdf Friday against Illinois tax officials for imposing unlawful taxes on ""Fannie Mae"":http://fanniemae.com/portal/index.html and ""Freddie Mac."":http://www.freddiemac.com/


Several Illinois counties have attempted to collect transfer taxes from the GSEs, and some have threatened to reject future property transfers from the enterprises if they do not pay the state and county transfer taxes.

""FHFA must resist when local governments impose unlawful tax-raising programs on Fannie Mae and Freddie Mac that, in turn, create a cost for taxpayers across the country,"" the FHFA said in a ""press release"":http://www.fhfa.gov/webfiles/24028/FHFALawsuit62212F.pdf Friday.

The FHFA conceded that ""[f]ederal law does provide for Fannie Mae and Freddie Mac to pay real estate taxes on the value of properties they hold."" However, it reinforced that federal law ""does not sanction taxes tied to the transfer of properties.""

The suit filed in a district court in Illinois references Fannie Mae's charter, which states that the enterprise ""shall be exempt from all


taxation now or hereafter imposed by any State, territory, possession, Commonwealth, or dependency of the United States, or by the District of Columbia, or by any county, municipality, or local taxing authority.""

Freddie Mac's charter includes similar stipulations.

However, despite these exemptions, Illinois officials have demanded transfer fees from both enterprises.

A letter from the Dekalb County, Illinois' Office of the Clerk and Recorder in April stated that the GSEs ""have claimed an exemption as a government entity which is factually erroneous.""

The letter went on to demand the GSEs pay transfer fees accumulated over the past five years and warns that, ""[m]oving forward, we have notified agents that effective immediately all documents where taxes are not paid from your entity will be rejected.""

""Because Congress has expressly exempted the Enterprises and the Conservator from all state and local taxation with a single exception that is inapplicable here, the Enterprises are immune from liability for those taxes,"" countered the FHFA in its ""court filing."":http://www.fhfa.gov/webfiles/24027/RUTHERFORD_COMPLAINT_wEXHIBITS.pdf

""To resolve the actual controversy as to the application of Plaintiffs' federal statutory immunity, Plaintiffs are entitled to a judgment declaring that they cannot be liable for the taxes Defendants seek to collect.""

Similar claims and demands have been made from other Illinois counties.

The FHFA's lawsuit ""asserts that Fannie Mae and Freddie Mac are exempt from the Illinois transfer taxes and asks the court to block this improper taxation,"" stated the FHFA in its press release.


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