My organization is a federally chartered credit union with a payroll big enough to otherwise owe New York's MCTMT. Does federal law exempt us from it?

Plain-English summary

A federally chartered credit union located within the MCTD, with quarterly payroll expenses exceeding $2,500 (the threshold that would otherwise make it an "employer" subject to MCTMT under Tax Law § 800(b)), asked whether it qualifies as an "instrumentality" of the United States — a category expressly excluded from MCTMT's employer definition.

The Department didn't need to resolve that instrumentality question. Instead, it pointed to a separate, broader federal statute: 12 U.S.C. § 1768 exempts federal credit unions — along with their property, franchises, capital, reserves, surpluses, other funds, and income — from "all taxation now or hereafter imposed by the United States or by any State, Territorial, or local taxing authority," with a narrow carve-out that lets real property and tangible personal property still be taxed like similar property generally. Because MCTMT is a state tax on payroll expense (not a tax on real or tangible personal property), it falls squarely within the federal exemption. The credit union is exempt from MCTMT.

What this means for you

Federally chartered credit unions

You're exempt from MCTMT regardless of whether you'd otherwise qualify as a federal "instrumentality" — the broader federal tax-exemption statute for federal credit unions (12 U.S.C. § 1768) does the job on its own. This exemption doesn't extend to real property or tangible personal property tax, which federal credit unions still pay like other property owners.

State-chartered credit unions

This exemption is specific to federally chartered credit unions under 12 U.S.C. § 1768. A state-chartered credit union doesn't automatically get the same federal tax immunity and should separately evaluate its MCTMT exposure.

Common questions

Q: Does this exemption cover other state and local taxes too, not just MCTMT?
A: The federal statute (12 U.S.C. § 1768) is broad — it exempts federal credit unions from taxation by the United States or any state, territorial, or local taxing authority generally, with only the real-property/tangible-personal-property carve-out. This opinion addresses MCTMT specifically, but the underlying federal exemption is not limited to it.

Q: Is a state-chartered credit union exempt from MCTMT the same way?
A: Not automatically. This exemption stems from a federal statute that applies specifically to federally chartered credit unions.

Q: Does the credit union still have to pay tax on its real estate?
A: Yes. The federal exemption statute explicitly carves out real property and tangible personal property, which remain taxable to the same extent as similar property generally.

Q: Can I rely on this ruling for my own organization?
A: No. This advisory opinion binds the Department only as to the petitioner and the specific facts described.

Citations and references

Statutes:

• Tax Law § 800(b) (MCTMT "employer" definition and exceptions, including U.S. agencies/instrumentalities)
• 12 U.S.C. § 1768 (federal credit union exemption from federal, state, territorial, and local taxation, except real/tangible personal property tax)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/mctmt_ao.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/mctmt/a09_1mctmt.pdf

Original ruling text

New York State Department of Taxation and Finance

Office of Counsel
Advisory Opinion Unit

TSB-A-09(1)MCTMT
Metropolitan Commuter
Transportation Mobility Tax
October 28, 2009

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE

ADVISORY OPINION

PETITION NO. Z090713A

Petitioner name and address redacted President and CEO of [Credit Union] asks whether a
federally chartered credit union is an instrumentality as defined in Section 800(b)(1) of Article 23 of the
Tax Law. We conclude that federally chartered credit unions are not subject to the Metropolitan
Commuter Transportation Mobility Tax (MCTMT).
Facts
Credit Union is a federally chartered credit union in County A. County A is located within the
Metropolitan Commuter Transportation District (MCTD). The quarterly payroll expenses of Credit
Union exceed $2,500, and therefore absent an exception Credit Union would be subject to the MCTMT
on its employees.
Analysis
The MCTMT is contained in Article 23 of the Tax Law. Section 800(b) of Article 23 defines
“employer” for purposes of the MCTMT as follows:
Employer means an employer required by section 671 of this chapter to deduct and withhold tax
from wages, that has a payroll expense in excess of two thousand five hundred dollars in any
calendar quarter; other than
(1) any agency or instrumentality of the United States;
(2) the United Nations; or
(3) an interstate agency or public corporation created pursuant to an agreement or compact
with another state or the Dominion of Canada.
It is not necessary to address the issue of whether or not Credit Union is a federal instrumentality
because, as a federally chartered credit union, it is exempt from the MCTMT under Section 1768 of Title
12 of the United States Code (12 USC § 1768).
This statutory provision, states in relevant part:
The Federal credit unions organized hereunder, their property, their franchises, capital,
reserves, surpluses, and other funds, and their income shall be exempt from all taxation
now or hereafter imposed by the United States or by any State, Territorial, or local taxing
authority; except that any real property and any tangible personal property of such
Federal credit unions shall be subject to Federal, State, Territorial, and local taxation to
the same extent as other similar property is taxed.

-2-

TSB-A-09(1)MCTMT
Metropolitan Commuter
Transportation Mobility Tax
October 28, 2009

This federal tax exemption provided to federal credit unions, exempts Credit Union from the
MCTMT. Accordingly, we conclude that Credit Union is exempt from the Metropolitan Commuter
Transportation Mobility Tax.

DATED: October 28, 2009

NOTE:

/S/
Jonathan Pessen
Director of Advisory Opinions
Office of Counsel

An Advisory Opinion is issued at the request of a person or entity. It is limited to
the facts set forth therein and is binding on the Department only with respect to
the person or entity to whom it is issued and only if the person or entity fully and
accurately describes all relevant facts. An Advisory Opinion is based on the law,
regulations, and Department policies in effect as of the date the Opinion is issued
or for the specific time period at issue in the Opinion.