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Volume 10 - Opinions of Counsel SBRPS No. 47

Opinions of Counsel index

School tax relief [STAR] exemption; Senior citizens exemption (generally) (income reporting period) - Real Property Tax Law, §§ 425, 467:

In providing proof of income for purposes of the enhanced school tax relief [STAR] or senior citizens exemption, the applicant must provide a copy of his or her income tax return for the year immediately preceding the date of application, or, if that form has not yet been filed, the form for the year before such year.

Our opinion has been requested as to which year’s income is to be reported by applicants for the senior citizens exemption (Real Property Tax Law, §467) and for that portion of STAR which provides an enhanced benefit to senior citizens (RPTL, § 425(4)).  {1}

The STAR law provides that eligibility for the enhanced exemption is to be based upon the owners’ combined income “for the income tax year immediately preceding the date of making application for the exemption” (RPTL, § 425(4)(b)). Virtually identical wording appears in the senior citizens exemption (RPTL, § 467(3)(a)). Read literally, this would suggest that any senior citizen who wishes to apply for either or both exemptions in 1998 must submit a copy of his or her 1997 federal or state income tax return with the application. {2}  Though laws should ordinarily be taken to mean what they say, this is one of those rare cases in which a literal construction may not be appropriate.

The problem is that a strict reading of the law presents very significant practical hurdles for would-be applicants at the beginning of each calendar year. For example, it is virtually impossible for senior citizens to apply for the exemptions in January of any year, because the data they need to prepare their income tax returns (e.g., Forms 1099) are rarely available so early in the year. And though the data will generally become available by late January or early February, most taxpayers are not required to file their 1997 income tax returns until April 15, 1998, about six weeks after the March first taxable status date that prevails throughout most of the State. Indeed, in 4 Op.Counsel SBEA No. 4, we concluded that for section 467 purposes in a village with a January 1, 1975 taxable status date (see, RPTL, § 1400), the income reporting period was the January 1 - December 31, 1973 income tax year.

We find it inconceivable that there was any legislative intent to create a tax-relief program which would require interested senior citizens to prepare their income tax returns substantially earlier than they are required to do for federal and state income tax purposes. {3}  Nor is it any more plausible that the intention was to create a “blackout” period at the beginning of each calendar year during which no senior citizens or enhanced STAR applications could be filed. Since, as a general rule, a literal construction of a statute must be avoided if it will lead to absurd results, we must look behind the wording of this particular law, and find a reading that will further, rather than frustrate, its purpose.

It seems to us that the most reasonable interpretation of this statutory language is that an applicant should provide a copy of his or her income tax return for the “immediately preceding year” if it is available when the application is filed. If that return is not yet available, the applicant should be permitted to provide the return for the year before the “immediately preceding year.” In other words, if a senior citizen applies for the enhanced STAR or the senior citizens exemption for 1998 and the applicant’s 1997 income tax return is available at that time, a copy should be furnished with the application. If not, the applicant’s eligibility should be based upon his or her 1996 income, and a copy of the 1996 tax return, assuming one was filed, {4} should be accepted as proof of such income.

We recognize that the use of an earlier tax year’s information could increase the number of applicants who satisfy the eligibility requirements. {5}  However, we believe that the alternative approach -- insisting that all seniors filing in January and February of 1998 must produce their 1997 income tax returns -- would impose undue hardships upon senior citizens and cause significant administrative problems for local governments, and must therefore be rejected.

October 1, 1997

NOTE:  Construes law prior to L.2002, c.83, Pt. E, which extensively amended the STAR provision discussed above.  The portion of the amendment relevant to this Opinion removed the reference to the “immediately preceding” income tax year and inserted in its place language that specifies which income tax years apply to which assessment rolls.  The above analysis is thus no longer applicable to STAR but remains applicable to the Senior Citizens exemption.

{1}  Recipients of the senior citizens exemption are also deemed eligible for the enhanced STAR benefit (RPTL, §425(6)(c)).

{2}  Neither the enhanced STAR nor the senior citizens exemption expressly requires applicants to file their income tax returns with their applications, but each authorizes the State Board to prescribe the application form (RPTL, §§ 425(6)(a), 467(5), respectively). The prescribed forms (RP-425, RP-467, RP-467-Rnw) explicitly require the submission of the applicant’s latest federal or state income tax return, if one was filed.

{3}  By way of background, the reference in STAR to the immediately preceding income tax year was taken verbatim from the senior citizens exemption (see, RPTL, § 467(3)(a)), and harkens back to a time when taxable status date was May first. At that time, applications for the senior citizens exemption generally did not have to be filed until two weeks after most income tax returns for the prior calendar year had been filed, so this language was not particularly troublesome in its original context. Taxable status date was changed to March first as of 1986 (L.1984, c.379).

{4}  Applicants who did not file 1996 income tax returns would have to establish their 1996 incomes through other means. It would not be appropriate for them to use income tax returns from 1995 or earlier years.

{5}  Taxpayers might “time” their filings to use the year with the lower income. Note, however, that the timing of transactions for tax advantage is a common (and legal) practice under the income tax laws.

Editor’s note: The conclusions herein as to the enhanced STAR exemption were subsequently codified (by L.1998, c.56) as RPTL, § 425(4)(b)(ii).