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Volume 9 - Opinions of Counsel SBEA No. 79

Opinions of Counsel index

Correction of errors (unlawful entry) (wrongful removal of partial exemption) - Real Property Tax Law, §§ 520, 550:

Where an assessor wrongly removes a partial exemption, invoking the provisions of Real Property Tax Law, section 520, without authority, such action constitutes an “unlawful entry” and may be corrected in accordance with the provisions of Article 5, Title 3, of the Real Property Tax Law.

Our opinion has been asked regarding the improper application of Real Property Tax Law (RPTL), section 520. The facts relating to this inquiry are as follows.

A taxpayer purchased the subject property on November 14, 1989. A veterans exemption (RPTL, § 458) had been granted to the prior owners of the property. On February 7, 1987, the veteran had transferred the property to the sole ownership of his wife. The assessor learned of the interspousal transfer in January 1990, when the veteran sought to transfer the exemption to new property that he had recently purchased. The assessor then removed the previously granted exemption (utilizing § 520) back to February 7, 1987. This resulted in the new owner receiving a bill for approximately $1,700 in additional taxes. The issue is whether the assessor correctly acted pursuant to RPTL, section 520.

RPTL, section 520, provides for the assessment and taxation of exempt property upon the transfer of title. However, this section is only applicable where the assessor learns of the transfer within the fiscal year of the transfer or the next succeeding fiscal year. Since the transfer from the veteran to his wife occurred on February 7, 1987, and the assessor did not learn of the transfer until January 1990, section 520 was not applicable. Accordingly, RPTL, section 520, clearly should not have been applied to this transfer. In fact, the exemption should not have been removed. The spouse of a veteran is eligible to receive the veterans exemption (see, 6 Op.Counsel SBEA No. 93).

With respect to the transfer to the current owner on November 14, 1989, RPTL, section 520, did apply, since the new owner was “not otherwise entitled to an exemption from taxation” and acquired the title to real property which was wholly or partially exempt from taxation. Here, the assessor learned of the transfer in January 1990 (within the next succeeding fiscal year).

Accordingly, it is our opinion that the assessor had no authority to invoke the provisions of section 520 relative to the exemption granted prior to November 14, 1989.

An administrative refund of taxes is available pursuant to RPTL, section 556, only where there has been a “clerical error,” “error in essential fact” or “unlawful entry,” as those terms are defined in RPTL, section 550. In our opinion, the error described here may be considered an “unlawful entry” as defined in RPTL, section 550(7)(c): “an entry of assessed valuation on an assessment roll or on a tax roll, or both, which has been made by a person or body without the authority to make such entry.” Here, the assessor did not have the authority pursuant to RPTL, section 520, to remove the exemption pro rata to February 7, 1987.

Subdivision 1 of section 556 provides that a tax levying body may refund the amount of taxes attributable to an unlawful entry, provided an application for refund (form EA-556) is made within three years from the annexation of the warrant for such tax.

March 7, 1991