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Volume 8 - Opinions of Counsel SBEA No. 63

Opinions of Counsel index

Correction of errors (refund) (county liability for school taxes) - Real Property Tax Law, § 556:

County liability for administrative refunds of school taxes pursuant to the RPTL is limited to such taxes relevied by the county.

Administrative refunds of taxes are provided for in section 556 of the Real Property Tax Law. That section was added in 1974 (L.1974, c.177) as part of a new Title 3 in Article 5, which consolidated and simplified prior procedures relating to administrative correction of errors on assessment rolls.

Repealed but substantially re-enacted in new Title 3 were various provisions relating to corrections by town assessors and county legislative bodies (former §§ 550-558), villages (former § 1412) and school districts (former § 1316). In regard to the last category, school district corrections, subdivision 3 of former section 1316 provided that:

3. Whenever it is established to the satisfaction of the school authorities of a school district that taxes for school purposes have been unlawfully or erroneously assessed, levied and collected during the preceding school year, they shall refund to the person or persons who have paid such unlawful or erroneous taxes the amount thereof . . . [emphasis added].

Thus, there can be no question that as provided in subdivision 3 of former section 1316, liability for school tax refunds was that of the school district, with the exception of relevied school taxes (in regard to relevies, see former § 556(5)). With the enactment of Title 3 of Article 5, the previously separate refund provisions of sections 556(3) and (5), 1316(3), and 1412 were consolidated in new section 556. The new statute provides for application to be made to the County Director of Real Property Tax Services, who must investigate the matter and issue a report with recommendations to the “tax levying body”.

For purposes of Title 3 of Article 5, a “tax levying body” is defined as “the governing board of a municipal corporation which annexes a warrant for the collection of taxes to a final assessment roll” (§ 550(5)). A “municipal corporation” is defined to include school districts (§ 102(10)), and it is the school authorities of the district who annex the warrant for the collection of school taxes (see, § 1306(1),(2)).

Thus, the county is not the “tax levying body” for purposes of the levy of school taxes. The reference to charge-backs of refunded taxes to “each municipal corporation . . .” in paragraph (a) of subdivision 6 of section 556 includes taxes levied by one municipality, such as the county, on behalf of another, such as a town (see, RPTL, § 900; and, Town Law, § 115). That school taxes are not included seems particularly clear from the concluding sentence of said paragraph (a), to wit, “Amounts so charged to cities, towns and special districts shall be included in the next ensuing tax levy.” Noticeably absent is any reference to school districts.

That is not the case, of course, with respect to refunds of relevied school taxes. Paragraph (b) of subdivision 6 of section 556 makes it absolutely clear that the county which receives an unpaid school tax is initially liable for any refund of such tax thereafter collected, although the refunded amount is ultimately charged back to the district in the manner provided in that same paragraph (b). This approach is consistent with the judicial reasoning that, upon relevy, the returned unpaid school taxes “become a part and parcel of the county tax itself and when collected become the property of the county” (In re Wadhams’ Estate, 249 App. Div. 271, 292 N.Y.S. 102, at 107 (4th Dept., 1936)).

Lastly, it seems clear that if counties were, in fact, liable for initial school tax refunds, there would have been no need for a separate provision applicable to refunds of relevied school taxes (i.e., § 556(6)(b)). Rather, what is now paragraph (a) of subdivision 6 of section 550 could have been broad enough to include both school taxes levied and collected by the school district prior to any county relevy, and those returned unpaid school taxes relevied by the county, simply by adding a reference to “school district” in the second sentence.

March 16, 1984