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Volume 6 - Opinions of Counsel SBEA No. 58

Opinions of Counsel index

Special franchise assessment (assessment by State Board) (late mailing of final special franchise assessments) (addition of difference to rolls) - Real Property Tax Law, §§ 553, 616:

An assessor is to enter only the final assessment of a special franchise on the assessment roll. If some other amount is entered, and the final assessment exceeds that number, the difference may be added to the final assessment roll of the current or succeeding year.

A final special franchise assessment was not certified to the assessor until after the levy and extension of taxes on the assessment roll. The assessor had entered the tentative assessment of the special franchise, as determined by the State Board of Equalization and Assessment (Real Property Tax Law, § 608), on the tentative assessment roll. The final assessment exceeded the tentative assessment, and the question is whether the difference between the tentative and the final assessments may be added to the assessment roll and made subject to taxation.

The State Board has sole responsibility for the assessment of special franchises (§§ 202(l)(a), 600(1)). It must determine a tentative assessment and notify special franchise owners and assessing units (§ 608), hear complaints (§ 612), and then determine a final assessment (§ 614). With respect to special franchise property located in cities in which two or more school districts lie, and in towns, the State Board is directed to file a certificate of final assessment with the assessor ten days before “grievance day” (§ 616(1)). However, this deadline has been held to be directory rather than mandatory (see, Consolidated Edison Co. of New York v. State Board of Equalization and Assessment, 60 A.D.2d 356, 401 N.Y.S.2d 871, mot. for lv. to app. den., 45 N.Y.2d 706; 4 Op.Counsel SBEA No. 93). Therefore, a later certification does not invalidate a final special franchise assessment.

If certification is not timely received, the final assessment roll should not include an assessment for the special franchise. There is no authority for the assessor to enter a tentative assessed value for that property on an assessment roll (see, § 616).

Nonetheless, many assessors have, as a matter of practice, entered some value for the special franchise on both the tentative and final assessment rolls. Their rationale often has been that it would be unreasonable to omit an assessment for property which frequently constitutes a significant portion of the local tax base in a given year, notwithstanding the fact that the omission could be added to the following year’s assessment roll (§ 551(1)).

In order to remedy this situation, in 1978, the State Legislature amended Title 3 of Article 5 of the Real Property Tax Law (L.1978, c.390, §§ 2,4) which provides for administrative correction of errors on assessment and tax rolls. First, it amended the definition of an “unlawful entry” to specifically include an entry on an assessment roll of special franchise property which exceeds the final assessment as determined by the State Board (§ 550(7)(e)). This type of error may be corrected administratively on the tentative (§ 552) or final assessment roll (§ 553), or the tax roll (§ 554), or a refund may be had for taxes paid (§ 556), provided in any case that timely application for the correction or refund has been submitted (e.g., within three years of the date of the annexation of the warrant for the collection of taxes, in the case of a refund application (see, § 556(l)(a)).

Second, the Legislature amended section 553 to provide that if an entry on a final assessment roll of assessed value of a special franchise is less than the final assessment as determined by the State Board, the assessor may add the difference in value to the current or succeeding year’s final assessment roll as provided in subdivisions (l)(g) and (4)(a)(6) of section 553. The latter subdivision directs the tax levying body to proceed in the following manner upon receipt of a notification of an addition to the assessment of a special franchise:

4.(a) . . .
* * *
(6) . . . enter on the assessment roll of the current year an assessment of the real property, equal to the difference between the assessment . . . determined by the state board . . . and the amount at which the property was placed upon the final assessment roll of the preceding or current year, and levy a tax thereon by applying the tax rate of the appropriate municipal corporation or special district for the appropriate year.

In this particular case, the certification of the final assessment was received after the levy and extension of taxes, and this final assessment exceeded the value entered on the assessment roll by the assessor. Therefore, the difference between the assessment entered by the assessor for this special franchise property and the final assessment as certified by the State Board should be added to the following year’s final assessment roll in the manner required by section 553. As subdivision 4, paragraph (a), subparagraph (6), cited above makes clear, the tax rate to be applied to that assessment in order to compute tax liability is the tax rate of the municipality or special district for the year in which the lesser entry was made on the assessment roll.

April 24, 1979