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Volume 8 - Opinions of Counsel SBEA No. 13

Opinions of Counsel index

Assessment review, small claims (refunds - responsibility for payment) - Real Property Tax Law, §§ 726, 734:

A county which levies taxes must pay refunds of town and county taxes and special district charges due as a result of small claims assessment review proceedings; however, proportionate shares of the refunds are to be charged back to the municipal corporation or special district on behalf of which they were levied.

This opinion concerns refunds of taxes where petitioners in small claims assessment review proceedings are granted reductions in their assessments. The question is which unit of local government, the county or the assessing unit, is responsible for paying such refunds.

Section 734(1) of the RPTL provides that where a final order of a hearing officer directs the reduction of an assessment, a refund shall be made “within ninety days of such decision in the same manner as provided for in [RPTL, § 726].” Pursuant to section 726(1)(a), in a tax certiorari proceeding (RPTL, Art. 7), where an order reducing an assessment is made subsequent to a tax or special ad valorem levy having “been imposed by” the county legislative body upon the real property in question, refunds are required to be audited and paid by the county. In most counties, town and county taxes are “imposed” or “levied” by the county (RPTL, § 900). However, while the county must pay the full amount of the refund in the first instance, provision is also made in section 726(1 )(a) for charging back that portion of the refund which was imposed on behalf of a city, town, village or special district (see also, RPTL, § 726(1 )(c) re: school district refunds).

As noted above, the provisions of section 726 apply generally to small claims refunds. It has been argued that subdivision one of section 734, as amended by chapter 531 of the Laws of 1982, makes cities and towns responsible for paying those refunds. In fact, that amendment had a very different purpose. As so amended, subdivision one of section 734 now provides that:

Notwithstanding paragraph (a) or (b) of subdivision one of section seven hundred twenty-six of this chapter, where an assessment reduction is not in excess of ten thousand dollars the amount of tax or other levy, including interest thereon, to be refunded shall be charged to the municipal corporation for special district by or on behalf of which they were levied; or as is otherwise provided by law with respect to Nassau and Suffolk counties. (Emphasis added).

This amendment does not make cities and towns responsible for paying refunds due as a result of small claims decisions. Rather, it relieves cities and towns of the burden of the county’s share of refunds where the assessment reduction is $10,000 or less. (Note that section 726 directs that cities and towns bear such burden in ordinary certiorari proceedings. This latter provision was unchanged by chapter 531. (See, 7 Op.Counsel SBEA No. 117).)

Thus, the county which levied such taxes and charges must, in the first instance, make refunds of town, county and special district charges due as a result of decisions in small claims assessment review proceedings. However, as previously noted, proportionate shares of such refunds are to be charged back to the municipal corporation or special district on behalf of which they were levied.

September 23, 1983

NOTE: Section 726(1 )(a) was amended by Chapter 832 of the Laws of 1984, effective January 1, 1985, to permit amendment of a tax roll to incorporate a reduction in assessed value in a small claims assessment proceeding at any time “prior to the expiration of the warrant” for the collection of taxes imposed on that assessment. The amendment does not alter the conclusion in this Opinion.