STAR: Correction of errors
Note: The STAR exemption is no longer available to new applicants. Instead they may be eligible for the STAR credit which is issued in the form of a check or direct deposit from New York State. Information on the STAR credit is available at STAR resource center.
As with any exemption, errors may be discovered in the local administration of the school tax relief (STAR) exemption (Real Property Tax Law §425). This appendix addresses the procedure for correcting those errors.
Q1. The assessor intended to grant an Enhanced STAR exemption to Jane Doe's property but it was not entered on the school roll. Ms. Doe has now received her 2016-2017 school tax bill and wants her exemption. Can this be corrected?
A. Yes. Where an assessor fails to act on a partial exemption and the property is entitled to such partial exemption, this is a defined "clerical error" (RPTL §550(2)(c)). Prior to the expiration of the school tax warrant, Ms. Doe should file form RP-554 with the county director of real property tax services seeking a corrected tax bill. The county director then investigates and recommends to the tax levying body if the tax roll and tax bill should be corrected. If the director concludes that Ms. Doe should have received the exemption and the tax levying body concurs, the tax roll will be corrected and the tax collector will be authorized to collect a lesser amount of tax from Ms. Doe. Ms. Doe will be sent notice of the correction, and, assuming she filed the RP-554 with the director during the interest-free period, she will have eight days from the mailing of her notice to pay the corrected tax without interest.
In the alternative, Ms. Doe may file form RP-556 with the county director seeking a refund or credit. Note that an application for a refund or credit based upon a clerical error may be filed up to three years following the annexation of the warrant to collect the taxes containing the error.
The school district will be entitled to State reimbursement for the reduction in Ms. Doe's school tax bill or for any refund paid to her (see Q5).
Q2. While the assessor intended to grant the Enhanced exemption to Ms. Doe in Question 1, the exemption was erroneously given to Robert White whose property was ineligible for an Enhanced STAR exemption. Can Mr. White's erroneously granted exemption be corrected, and, if so, when?
A. Yes. If the erroneous grant of the exemption been discovered in sufficient time before the levy of the school tax, this would be an "error in essential fact" (RPTL §550(3)(e)): the incorrect entry of a partial exemption on an assessment roll for a parcel not eligible for that exemption. The assessor may petition the board of assessment review to correct the final assessment roll at that board's "second meeting" conducted for school tax purposes (RPTL §553).
If the error is discovered after the school levy, a different procedure is followed. STAR specifically authorizes the revocation of erroneously granted exemptions, even after the school levy has occurred (RPTL §425(12)). To do so, the assessed value attributable to each improperly granted STAR exemption shall be entered separately on the next tentative or final assessment roll (RPTL §425(12)(b)). The procedures for the entry of "omitted" property on that next tentative roll (RPTL §551) or final roll (RPTL §553) are to be followed when making this correction.
In this case, along with his 2016-2017 school taxes, Mr. White should be billed for the school tax savings he mistakenly received when he was wrongly credited with Ms. Doe's 2015-2016 Enhanced STAR exemption. His additional liability will be the amount of the 2015 assessment to which STAR was applied, multiplied by the 2015-2016 school tax rate.*
That amount will be added to (or billed additionally) with Mr. White's own 2017-2018 school taxes. Note, however, that if Mr. White himself qualifies for the Basic (or Enhanced) STAR for his 2017-2018 school taxes, he should receive that exemption.
In all cases where a property owner erroneously received an Enhanced STAR exemption on his or her 2016-2017 school tax bill, ORPTS strongly recommends that the taxpayer be given notice as soon as possible of the assessor's intention to correct that error on the 2017-2018 school tax roll. This will provide advance notice to the taxpayer so that he or she may budget tax expenditures accordingly. Recognize that when the provisions of section 551 or 553 are used next year to correct the 2017 assessment roll, the property owner must be given notice (RPTL §425(12)(c)). Our suggestion of an additional notice at this time is intended as a courtesy to the taxpayer who may feel inconvenienced by the assessor's error.
Q3. Given answer #2, for 2017-2018 school tax purposes, the school district will receive two State payments for Ms. Doe's STAR exemption: the incorrect one applied to Mr. White on the assessment roll and the correct one applied to Ms. Doe after she receives a corrected tax bill or refund. How is this to be corrected?
A. When the school district submits its STAR payment request for 2018-2019, it must report the additional revenues it has billed Mr. White as a result of the correction of errors process. This amount will then be deducted from the district's 2018-2019 STAR payment.
Q4. If Ms. Doe should have received a Senior citizens exemption (RPTL 467) and therefore Enhanced STAR as well, but both were granted to Mr. White, can both of Mr. White's exemptions be corrected on next year's roll?
A. The STAR exemption may be corrected in the manner described in Answer No. 2. For the senior citizens exemption, it is also now possible for an assessor to petition the board of assessment review at its second meeting to correct an incorrect entry of a partial exemption granted on the preceding year's assessment roll to a parcel that was not entitled to such exemption, provided there has been no transfer of title since the filing of the final assessment roll containing such exemption, and provided further that the owner of the property has not renounced the exemption (RPTL §496). While it is applicable to all partial exemptions, including STAR, the STAR correction provisions discussed in Answer No. 2 also remain in place.
Q5. When a taxpayer is given a corrected tax bill or is granted a refund based on an omitted STAR exemption, will the State provide reimbursement resulting from the correction or refund, and if so, how?
A. Yes, the State will pay the full amount of the STAR exemptions. If the tax roll and bill are corrected pursuant to section 554, the school district collecting officer will necessarily collect less from the taxpayers. For other, locally-financed exemptions, the RP-554 is attached to or filed with the tax roll to account for the difference. However, since the State must cover the full cost of all STAR exemptions (RPTL §1306-a), once a corrected bill has been issued in this case, the school district should file with ORPTS a supplemental aid application (RP-6704-B1), asking to be reimbursed for the additional STAR-related cost represented by the corrected bill.
Similarly, when a refund is approved pursuant to RPTL §556, the normal procedure is either (a) the school district will pay the refund directly to the taxpayer, or (b) if the tax has been returned to and relevied by the county, the county will pay the refund to the taxpayer and then "charge back" the refund to the school district (RPTL §556(6)(b)). These refund procedures would apply to corrected STAR exemptions to the same extent that they apply to other corrected exemptions, except that the school district would request reimbursement from the State for the refund by filing the supplemental aid application with ORPTS as described above.
To reduce the number of supplemental requests for STAR aid, we recommend that the school district delay the submission of any supplemental claims until it can address as many corrections as possible. It may request reimbursement both for corrections of tax bills and for refunds of taxes in the same claim.
*For assessors using the New York State Real Property System [RPS], omitted taxes should be included on the 2016 assessment roll as Roll Section 9 entries. Although they will appear on the assessment roll, they will not be interpreted as actual parcel entries and will not be accumulated with normal assessment roll totals. They will be included with the appropriate school tax levy. Non-RPS users should process omitted taxes in their usual manner.