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Volume 9 - Opinions of Counsel SBEA No. 115

Opinions of Counsel index

Taxes (refund) (county paid delinquent school taxes) - Real Property Tax Law, §§ 726,1330:

A county which, in its capacity as guarantor of taxes, paid delinquent school taxes to a school district, is entitled to a refund of excess taxes, with interest, from the school district, if the assessment of the tax delinquent parcel is subsequently reduced by court order.

We have been asked if a county, which, in its capacity as guarantor of taxes, paid delinquent school taxes to a school district, is entitled to a refund of excess taxes from the school district based on the difference paid on the assessment as originally established and the assessment as ordered reduced by a court.

A taxpayer failed to pay school taxes, and the county made the school district whole in accordance with subdivision four of section 1330 of the Real Property Tax Law (RPTL). The taxpayer judicially challenged the assessment and obtained a court-ordered reduction of the assessment. The issue is whether the county, which is neither the property owner nor the petitioner in the assessment challenge, but which has paid the taxes to the school, is entitled to the refund of excess taxes paid by the school district.

The language of section 726 of the RPTL, which provides for refunds of taxes following judicially ordered reductions in assessments, does not specifically address this issue. However, in City of Troy v. City School District of City of Troy, 26 A.D.2d 148, 271 N.Y.S.2d 422 (3d Dept. 1966), the Appellate Division considered the same question {*} and concluded that the School District did indeed have to pay the City the difference based on the court-ordered reduction.

In that decision, the Court interpreted the provisions of then section 1316 of the RPTL, which provided for a refund to be paid to “the petitioner or other person paying the tax,” to include the City which had guaranteed the taxes as an “other person.” Although section 1316 has since been repealed (L.1974, c.177), the provisions relating to refunds following court-ordered reductions were carried over in section 726(1)(c), where the same phrase “the petitioner or other person paying such tax . . .” is found. Because we find no legislative intent to indicate that any change from prior law was contemplated, we believe that the conclusion reached in the City of Troy case remains valid. Therefore, it is our opinion that the school district here must refund to the county the difference in taxes based on the court-ordered reduction in assessments. This result is consistent with our understanding of the municipal tax guarantee system.

With respect to interest, we note that the school district would be required to pay such interest, as prescribed by General Municipal Law, section 3-a, to the taxpayer if the refund were made to the taxpayer (ACO Realty v. Srogi, 105 A.D.2d 1083, 482 N.Y.S.2d 598 (4th Dept. 1984)). Since the guarantor of taxes stands in the same shoes as the taxpayer, a county, as guarantor of taxes, is likewise entitled to interest at the prescribed rate.

March 3, 1993

{*}  The sole difference being that the City, as opposed to the county, guaranteed the School District taxes. This insignificant difference does not alter the conclusion.