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Volume 7 - Opinions of Counsel SBEA No. 34

Opinions of Counsel index

Taxes (apportionment - partial acquisition by State between taxable status and lien dates); Correction of errors (refund) (cancellation) - Real Property Tax Law, §§ 556, 558, 932:

A property owner, who mistakenly pays an installment of taxes, a portion of which is attributable to real property acquired by the State, is not entitled to a refund of those taxes.

With respect to any unpaid installments, however, the owner may seek an apportionment pursuant to section 932 of the Real Property Tax Law. The remaining unpaid taxes, attributable to the State acquisition may then be cancelled pursuant to section 558.

A question has been raised concerning a property owner’s right to a refund of taxes paid and his liability for unpaid installments, where the State of New York acquired title to a part of his property. The parcel is located in the City of Poughkeepsie and title was acquired by the State on October 26, 1976. The next final assessment roll, however, did not reflect this division of ownership, i.e., the portion taken by the State, which should have been separately assessed as an exempt parcel, continued to be assessed with the taxable portion retained by the individual owner.

The owner of the taxable portion did not complain to the board of assessment review. After making the first quarterly installment payment of 1978 taxes “under protest”, however, he requested a refund and a “reassessment” for the remainder of the 1978 tax year. The balance of 1978 taxes remain unpaid.

The first question for our consideration is the property owner’s liability for these unpaid installments. In general, the condition and ownership of real property as of taxable status date controls the assessment and taxation of that property for the ensuing fiscal year (Real Property Tax Law, § 302). Thus, property owned by one person on taxable status date will be assessed and taxed in the name of that person on the assessment roll regardless of any change in ownership prior to the following taxable status date.

The law does allow, however, for an apportionment of assessment and taxes – subsequent to taxable status date – where there are separate interests in the real property. Section 932 of the Real Property Tax Law requires a collecting officer to accept taxes due on part of a parcel of real property provided the person offering to pay the same furnishes a specification of his interest, including an apportionment of the assessment as determined by the assessor. (Since the Charter of the City of Poughkeepsie contains no provision to the contrary, section 932 would be applicable to the City. See, Real Property Tax Law, § 2006; 3 Op.Counsel SBEA No. 49). The right to this apportionment exists when title to part of a parcel of real property has been acquired by the State (see, 4 Op.Counsel SBEA No. 60).

Thus, with respect to the unpaid 1978 tax installments, this property owner may request an apportionment of the assessment from the assessor and an apportionment of the tax liability by the collecting officer. The lien for the unpaid taxes remaining against the portion retained by the State could then be cancelled, as described below.

Real property acquired by the State after taxable status date but prior to lien date is immune from taxation and a tax on such property is void and unenforceable (2 Op.Counsel SBEA No. 33). The lien of such a tax, if unpaid, may be cancelled by a county legislature (which levied the tax) pursuant to section 558, subdivision 1 of the Real Property Tax Law.

Although the tax in this instance was neither levied nor imposed by the county (a requirement of section 558), it may be cancelled since the Poughkeepsie Common Council has this same authority to cancel the lien of an unpaid tax by virtue of section 53 of the City Charter. That provision grants to the Common Council “all the powers in relation to . . . city assessment rolls, and town and county taxes.” (References to “board of supervisors” are deemed to include an elected county legislature (County Law, § 150-a(2)). Thus, the reference in section 558 of the Real Property Tax Law to a county “legislature” is not inconsistent with the City Charter reference to the county “board of supervisors”). Since a county legislature may “charge back” to cities, town and special districts, those municipalities’ share of a cancelled tax (§ 558(1)), section 53 of the Poughkeepsie City Charter would similarly authorize the Common Council to “charge back” to the county, the county’s share of the cancelled lien in this case.

The owner’s request for a refund of the paid first installment poses a different problem. As a general rule, review of an assessment must be initiated by complaint before the board of assessment review on or before grievance day, with any determination by the board subject to judicial review under Article 7 of the Real Property Tax Law. Where warranted, the court may order a refund of taxes paid (§ 726). The right to an administrative refund is contingent upon the applicability of title 3 of Article 5 of the Real Property Tax Law, which authorizes refunds (§§ 556, 556-a(4)) for certain types of errors as defined in section 550.

None of these definitions, however, applies to the circumstances of this case. It has been suggested that the assessor was “without the authority to make such entry” and that this, therefore, qualifies as an “unlawful entry” (§ 550(7)(c)). However, it is our opinion that this error only arises where the assessor had no jurisdiction to act and it has been held by the courts in this State that where the assessor inadvertently assesses taxable and exempt property together (as occurred here), the issue is not one of jurisdiction, but rather overvaluation, which must be resolved through the ordinary grievance day - Article 7 review proceedings, and cannot be attacked collaterally (see, e.g., Sikora Realty Corp. v. City of New York, 262 N.Y.312, 186 N.E. 796 (1933); YWCA v. City of New York, 217 App.Div. 406, 216 N.Y.S. 248 (1st Dept. 1926), aff’d w/o op. 245 N.Y. 562, 157 N.E. 858 (1927)). As the Appellate Division noted in the YWCA case, supra, “[t]here probably was an overvaluation by the improper inclusion of exempt property. This at most was an error in valuation and not a lack of power to assess the premises as a whole [citations omitted]” (216 N.Y.S. at 253).

Since the refund sought is based upon an error which the courts have considered to be a valuation rather than a jurisdictional question, it is our opinion that administrative relief is not available under the provisions of title 3 of Article 5 of the Real Property Tax Law.

Lastly, our attention is called to section 20, subdivision 5, of the General City Law which empowers all cities “to pay or compromise claims equitably payable by the city, though not constituting obligations legally binding on it . . .”. It is unclear whether this particular type of claim would fall within the purview of section 20(5). However, in Loconti v. City of Utica, 61 Misc.2d 855, 306 N.Y.S.2d 772 (S.Ct., Oneida Co., 1969), the court held that where a property owner paid taxes on property which was entirely acquired by the State, there was “[no] claim . . . for the refund of taxes that can be equitably adjusted as contemplated by section 20(5) of the General City Law” (306 N.Y.S.2d at 774).

July 27, 1979