For those of us in Minnesota who don’t deal with taxes on an everyday basis, we can sometimes become confused regarding all the different types of taxes that exist. Federal income tax, state income tax, property tax, capital gains tax, unemployment tax, sales tax, franchise tax, excise tax and deed transfer tax — to name a few.

Most of these taxes are paid automatically or are collected by a knowledgeable party. It turns out that the state of Minnesota, and all of the counties within the state, are owed back taxes from Fannie Mae and Freddie Mac. Unpaid back taxes are the subject of a lawsuit filed by Hennepin County on behalf of itself and the other counties within the state.

Recently it was reported that Hennepin County Attorney Mike Freeman filed a lawsuit against Fannie and Freddie. The lawsuit charges that the two mortgage companies should pay the deed transfer tax each time a property is transferred. That apparently has not been done for several years and now includes perhaps 20,000 deed transfers. The deed transfer tax is 0.33 percent on everything more than $500.

It was reported that other states have filed similar lawsuits. In the case of a lawsuit filed in Michigan, the court ruled in favor of the state. Fannie and Freddie are appealing that decision.

In the case of the lawsuit filed by Hennepin County, it was filed as a class-action suit. The amount of money that it could potentially put into our county and state coffers is unknown; however with the 20,000 property estimate, it could amount to more than $10 million in unpaid taxes.

Source: Pioneer Press, “Minnesota: Counties sue Fannie Mae, Freddie Mac,” Elizabeth Mohr, Aug. 24, 2012

At our law firm we represent those with tax and legal issues, such as unpaid tax liabilities and other tax controversies.