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Volume 3 - Opinions of Counsel SBEA No. 9

Opinions of Counsel index

Taxes (collection) (penalty retained by county) - Real Property Tax Law, §§ 924(2), 936(2):

The five percent penalty charge in section 936(2) applies to unpaid taxes, and is part of the total liability which becomes a a county charge when the warrant expires. The five percent penalty charge belongs to the county.

Our opinion has been requested as to the five percent penalty which is added to unpaid taxes upon their return to the county treasurer, and whether such penalty is money which should be kept by the county.

The warrant for the collection of taxes must be annexed to the tax roll annually not later than December 31, and it must require that the collections be made not later than the following April 1 (Real Property Tax Law, § 904 (1) ). The warrant also directs the collecting officer to pay portions of the total to designated units of government not later than one week from the date of expiration of the warrant.

Subdivision 2 of section 924 authorizes the collecting officer to receive taxes without interest on or before January 31. The subdivision then provides that taxes received during the month of February incur an interest charge of one percent, and taxes received by the collecting officer after the month of February incur an additional interest charge of one-half of one percent per additional month or fraction thereof.

Subdivision 3 of section 924 provides that any interest collected by the collecting officer shall belong to the city or town.

Upon the expiration of the warrant (April 1), the collecting officer must cease his collecting and, within one week from the expiration date, he must pay over to the town supervisor the amount due to the town (§ 940). The amount paid to the town supervisor must be credited to the collector’s account by the county treasurer (§ 936(1)).

In the procedure for balancing the collector’s return, the county treasurer also takes into account the amount of money due and paid to the county and the amount of money represented by delinquent accounts. Thus, the balanced return would show on one side the amount of the warrant, and, on the other side, the moneys collected and paid and the delinquencies returned. When this return is balanced the collector’s duties and responsibilities are complete and the county becomes the collecting agency for the delinquent taxes.

Subdivision 2 of section 936 directs that “in making the return of unpaid taxes, the collecting officer shall add five per centum to the amount of each tax as levied . . . [T]he amount of such added per centum shall thereafter be deemed part of the amount of the unpaid tax.” The five percent charge in section 936(2) applies to the unpaid taxes, and it is a part of the total liability which becomes a county charge when the warrant expires.

The five percent charge clearly belongs to the county. In balancing the collector’s return, the county treasurer must give credit to the collector for the amount of unpaid delinquent taxes which the treasurer is satisfied is listed correctly on the return. This credit goes to the original amount of the warrant. The five percent penalty is really effective subsequent to the balancing of the collector’s return. Thus, if the collector fails to add the five percent to the amount of each delinquency, “the county treasurer shall make such addition” (§ 936(2)), and “the amount of such added per centum shall thereafter be deemed part of the amount of the unpaid tax” (emphasis supplied) (§ 936 (2) ). If and when this delinquency is paid, it is collected and retained by the county.

July 31, 1973

Updated: