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Volume 2 - Opinions of Counsel SBEA No. 85

Opinions of Counsel index

Taxes (question of jurisdiction) (refund) - Highway Law, §§ 141(1), 277; Real Property Tax Law, § 556(3):

A levy based upon a mistaken assumption of jurisdiction and expenses is illegal, and under certain circumstances a refund can be obtained by a person who has paid a tax based upon such levy.

We have received an inquiry requesting our opinion as to the availability of a method of reimbursement of taxes for certain property owners in a portion of a town annexed by a village.

During the summer of 1970 a portion of a town was annexed by a village. The town, however, failed to reduce its highway budget by whatever amount had been previously required for the maintenance of highways outside the village for which the town was exclusively responsible (Highway Law, §§ 141(1) and 277). Therefore, in January following the annexation, the town levy for highway taxes for the town outside the village was in excess of that which it should have been. The village, however, did take into account its new fiscal responsibilities as to the highways in the annexed area, and the village levy in May (following the annexation) reflected such increased costs.

The result in this situation is that the residents of the annexed area paid town and village taxes for highway purposes which, to some extent, applied to the same purposes (i.e., maintenance within the annexed area). Since the effect of this is an excessive levy by the town, the question is whether there is some procedure whereby a refund may be disbursed to the residents of the annexed area.

Both the Attorney General and the State Comptroller have, in the past, rendered opinions which are concerned with this type of problem, and such opinions offer guidance in reaching a conclusion.

First, the levy, based upon a mistaken assumption of jurisdiction and expenses, was illegal, and under certain circumstances, a refund can be obtained by a person who has paid a tax based upon such a levy (2 Op.State Compt. 108; 13 Op.State Compt. 271; 7 St.Dept.Rep. 494). It seems clear that the residents of the annexed area paid the taxes without knowledge of the illegal levy, and, therefore, such payments are not considered as being voluntary, and they can be refunded (Betz v. City of New York, 119 App. Div. 91, 103 N.Y.S. 886; aff’d 193 N.Y. 625, 86 N.E. 1112; Loconti v. The City of Utica, 61 Misc.2d 855, 306 N.Y.S.2d 772).

In our opinion the correct procedure for the refunding of such payments is contained in subdivision 3 of section 556 of the Real Property Tax Law. Pursuant to such subdivision, the county legislative body should direct that the appropriate refunds be made and that the total of such amounts be charged back to the town in the next tax levy.

May 5, 1972

NOTE: Construes law prior to L.1974, c.177.