Dist. Ct. erred in finding that defendant-City’s ordinance requiring buyers of real estate to pay real estate property transfer tax was preempted by certain federal tax exemption statutes under circumstances where plaintiffs (federally chartered “Fannie May” and “Freddie Mac”) argued that said exemption applied not only to properties that plaintiffs purchased, but also to private buyers of plaintiffs’ properties. Plain language of federal tax exemption statutes covered only federal entity and its various assets and did not apply to tax owed by private parties who transact with federally exempt entities. Moreover, exemption provisions did not specifically address transactions entered into by federal entities, and real estate transactions are not "assets or property" of federal entity and are not elements of any mortgage held by plaintiffs. Also, instant tax is better understood as tax imposed on buyer’s receipt of property rather than tax imposed on act of selling plaintiffs' property. Fact that instant tax had some effect on plaintiffs did not make it tax on plaintiffs.
Federal 7th Circuit Court
Civil Court
Taxation