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Volume 11 - Opinions of Counsel SBRPS No. 39

Opinions of Counsel index

Persons with disabilities and limited incomes exemption; Senior citizens exemption (income requirement) (Social Security - workers compensation offset) - Real Property Tax Law, §§ 459-c, 467:

Workers’ compensation offset amounts included in net social security benefits received are income for purposes of the persons with disabilities and limited income exemption and the senior citizens exemption.

We have been asked if a “workers’ compensation offset” appearing on the Social Security Administration’s form SSA-1099 of an applicant for the persons with disabilities and limited income exemption (Real Property Tax Law, § 459-c) should be considered as income in determining eligibility for such exemption. According to Box 5 (the net benefits received) of the form, the applicant received $6,360.60 of social security benefits (presumably Social Security Disability or SSDI) in 2001. According to the description of the benefits paid to the applicant, $1,473.60 of this total represented “workers’ compensation offset.”

The definition of income for purposes of section 459-c is similar (but not identical) to that used for the senior citizens exemption (compare RPTL, §§ 459-c(5)(a) and 467(3)(a)). Both definitions include social security benefits as income (notwithstanding the fact that many, if not most, recipients of those exemptions are, by definition, of low income and do not pay income taxes on such moneys-see, 33A Am Jur2d, Federal Taxation (2003), ¶ 13000 et seq.). Generally, the net benefits box indicates the amount to be considered as income (although Medicare premiums may be deducted where the municipality permits the deduction of unreimbursed medical costs-see, 10 Op.Counsel SBRPS No. 28).

Where a person is entitled to social security disability income and is also entitled to receive workers’ compensation payments, the SSDI payments are reduced (i.e., offset) by the workers’ compensation payments (42 USCS § 424a; Richardson v. Belcher, 404 U.S. 78, 92 S.Ct. 254, 30 L.Ed.2d 231 (1971); 70B Am Jur2d, Social Security and Medicare, §§ 1472, 1476; 81 C.J.S., Social Security, § 60). While workers’ compensation payments are excluded from gross income for income tax purposes, “[w]here a taxpayer’s social security benefits are reduced to offset workers’ compensation benefits received, the workers’ compensation benefits are treated as social security benefits . . .” (33A Am Jur2d, Federal Taxation (2003), ¶ 8312). The quoted language seemingly explains why the workers’ compensation amount is broken out on the SSA-1099 and included in net benefits paid.

As noted above, social security benefits are income for purposes of sections 459-c and 467. We have previously expressed the opinion that workers’ compensation payments are also considered as income for purposes of these exemptions (11 Op.Counsel SBRPS No. 6). In determining income eligibility for purposes of section 459-c and 467 then, we continue to recommend that the net benefits box on form SSA-1099 be utilized. Assuming that any workers’ compensation benefits received are recognized there, they should not, of course, be included yet a second time in computing the applicant’s income eligibility.

January 29, 2003