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Volume 1 - Opinions of Counsel SBEA No. 1

Opinions of Counsel index

Veterans’ exemption (eligible funds) (Mingling of funds) - Real Property Tax Law, § 458:

If the applicant can demonstrate that his bank account was at all times since the deposit of “eligible funds” equal to or in excess of the amount of exemption claimed, he is entitled to an exemption. If it should appear that his bank account was at some time reduced to an amount less than the amount claimed for exemption, the amount of exemption is limited to the lesser amount.

The “mingling” provision of the veterans’ exemption statute (subdivision 1, (2), section 458 of the Real Property Tax Law) provides that the mingling of “eligible funds” with other funds “shall not bar the granting of a claim for such exemption”.

The legal unit of the State Board has ruled that mere mingling of such “eligible funds” with other moneys would not justify the denial of an exemption on real property. However, the burden of proof remains upon the applicant to satisfy the assessor that the statutory requirements have been met. The question arises therefore as to what proof is necessary to warrant granting exemption where “eligible funds” have been mingled with other moneys.

The wording of the quoted provision would indicate that the Legislature intended that at least in some cases where there was mingling of such funds with other moneys, exemption should nonetheless be granted. In this view, the Legislature did not intend that the identical funds be used in all cases. In fact, it should be kept in mind that even where a deposit of “eligible funds” is made in a separate bank account and then withdrawn to purchase real property, in which case exemption is always granted, the actual identical funds have not been used since they have been mingled with other bank funds.

The question remains under what circumstances exemption should be granted where there has been mingling. It would seem reasonable to conclude that in order to give effect to legislative intent as expressed in the mingling provision where “eligible funds” have been mingled with other moneys, an assessor would be justified in granting tax exemption if the applicant can demonstrate that his bank account was at all times since the deposit of such “eligible funds” equal to or in excess of the amount of exemption claimed. If, on the other hand, it should appear that his bank account was at some time reduced to an amount less than the amount claimed for exemption, the amount of exemption should be limited to the lesser amount.

An example will serve to illustrate this matter.

It would appear that the purpose of the “mingling” provision can be accomplished if the whole account is analyzed to determine how much of the amount remaining after each deposit and withdrawal constitutes “eligible funds”. If it should appear after each deposit or withdrawal that the amount remaining equals or exceeds the aggregate amount of “eligible funds” deposited up to that time, such aggregate amount should be treated as “eligible funds”. Thus, assuming the following deposits and withdrawals:

January 1, 1955  -   $50 “eligible funds” (deposit)
January 15, 1955  - $100 other funds (deposit)
February 1, 1955  -  $50 “eligible funds” (deposit)
February 15, 1955 - $75 withdrawn

Since the balance of $125 remaining on February 15 is in excess of the aggregate amount of “eligible funds” deposited up to that time, namely, $100.00, the sum of $100.00 should be treated as “eligible funds”. If at any time the amount remaining is less than the aggregate amount of “eligible funds” deposited, only such lesser amount should be treated as “eligible funds” and the difference should not be supplied with other funds. Thus, assuming the following deposits and withdrawals:

January 1, 1955  -  $50 “eligible funds” (deposit)
January 15, 1955 - $50 other funds (deposit)
January 20, 1955 - $75 withdrawn
January 25, 1955 - $25 other moneys (deposit)

Since the balance remaining on January 20 was $25, the allowable amount of “eligible funds” on January 25 would be $25, not $50 ( amount of “eligible funds” deposited) although on January 25 the balance in the account was $50.

The above assumes that the veteran could not prove that the additional “eligible funds” were not saved and used to purchase the real property. The veteran might be able to prove the continued savings of the withdrawn funds by producing another bank deposit book showing the facts of continued saving. There are, of course, many reasons why individuals transfer money between banks. The interest return may be higher or a loan may be taken at one bank on the understanding that all or a substantial amount of the individual’s business will be transacted at the bank, etc.

May 31, 1960

Updated: