Marshall says ruling shows state not collecting taxes owed
April 17, 2012
Treasurer Kate Marshall said Monday that a Michigan federal judge has now confirmed her contention that the two federally created national mortgage corporations are illegally evading the state’s real property transfer taxes on foreclosed properties.
Marshall in January asked the Nevada Department of Taxation to change its interpretation of the law exempting the Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corp. (Freddie Mac) from the tax.
Both corporations maintain that they are exempt as institutional arms of the federal government.
But Oakland County, Mich., sued and recently won a ruling saying they aren’t exempt – potentially opening the door to claims from other states with a real property transfer tax such as Nevada as well.
“We have to have all entities in this state abide by these rules,” said Marshall. “Fannie and Freddie are not exempt from the rules.”
She also said the two are paying the transfer tax in Ohio.
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“If they’re paying it in Ohio, why aren’t they paying it in Nevada?”
State Taxation Director Bill Chisel said his office is aware of the Michigan ruling.
“We’re still looking into it,” he said. “But we haven’t sent out any specific guidance.”
Marshall said Fannie and Freddie announced recently that they will begin a major sell-off of foreclosed homes.
“Every day we wait, we’re losing money,” Marshall said. “Nevada should be collecting the money from these sales.”
But it isn’t just the state, she said. Marshall said every county in the state, as well as Clark County School District, receives revenue from that tax.
She also said it’s long past the deadline for the Taxation Department to respond to her request to change the rules – set at a maximum of 45 days.
“It’s getting to the point where every day, you’re walking away from money,” she said. “We need every dime we can get.”
For every $500 of property value, $1.30 goes to the state General Fund from the transfer tax. In addition, 10 cents goes to low-income housing, 55 cents to the county where the property is located and, in Clark County, another 60 cents to the school district.
To the state, that works out to $520 from the sale of a $200,000 home.
She said Taxation has estimated that assessing Fannie and Freddie would net the state about $6 million a year – which she thinks is low.
But in Michigan, she said, the judge ruled the tax debt retroactive to 2006. In Nevada, she said, that would generate a large amount of revenue for the state and counties, since 2006 and most of 2007 were before the housing market crashed.
To change the ruling, Taxation would have to pull back its 2008 advisory ruling exempting Fannie and Freddie from the tax.
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