Eighth Circuit - Federally chartered agencies not subject to Minnesota’s deed transfer tax 

February 5: The U.S. Court of Appeals for the Eighth Circuit today affirmed a federal district court’s dismissal of proceedings filed by a Minnesota county against certain federally chartered agencies for nonpayment of Minnesota’s deed transfer tax. Hennepin County v. Federal National Mortgage Ass’n, No. 13-1821 (8th Cir. February 5, 2014)


A Minnesota county filed an action (on behalf of itself and 86 other Minnesota counties) in federal district court, seeking a declaratory judgment that certain federally chartered agencies (Fannie Mae and Freddie Mac) and the Federal Housing Finance Agency had violated state law by failing to pay tax on transfers of deeds for real property.

The county sought damages between $5 million and $5.6 million and injunctive relief.

The federal district court granted the federally chartered agencies’ motion to dismiss for failure to state a claim. The district court concluded that the Minnesota deed transfer tax fell within the broad tax exemption under the charters establishing the agencies (the charters state that the agencies are “exempt from all taxation…imposed by any State” but identify their real property as the sole exception to the general rule).

Today, the Eighth Circuit affirmed, finding that Congress exempted the agencies from all state taxation except on real property and that Minnesota’s deed transfer tax was within the broad exemption.

Read the Eighth Circuit’s decision [PDF 36 KB]

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