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Volume 5 - Opinions of Counsel SBEA No. 105

Nonprofit organizations exemption (generally) (special ad valorem levies) (special assessments) - Correction of errors (unlawful entry) (procedure) - Real Property Tax Law, §§ 421, 490, 550, 554, 556:

Real property which is exempt from taxation pursuant to section 421 of the Real Property Tax Law is also exempt from special assessments and special ad valorem levies to the extent provided in section 490 of such law. Section 490 exempts property located outside cites and villages which receives an exemption pursuant to section 421 from operational costs of special districts. However, such property is liable for the capital costs of water supply and distribution systems, sewer systems, waterways and drainage improvements, and street, highway, road and parkway improvements.

Unlawful entries made in relation to wholly exempt real property may not be administratively corrected after taxes have been extended.

Our opinion has been requested concerning real property of a nonprofit organization which is wholly exempt from taxation (Real Property Tax Law, §421 (i.e., 420)). It has been entered on the taxable portion of the assessment roll as being liable for certain special benefit assessments and special ad valorem levies for the past six years and the amounts assessed and levied have been paid.

The applicant has filed form EA 74-2 with the Board of Assessment Review with respect to the assessment roll which was finally completed and filed in 1976 requesting that such entries be cancelled in that they constitute unlawful entries. The entries have reference to charges for a garbage district, light district, a library assessment, a water district and a sewer district.

Real property which is exempt from taxation pursuant to section 421 of the Real Property Tax Law is also exempt from special assessments and special ad valorem levies to the extent provided in section 490 of the Real Property Tax Law. The latter section exempts section 421 (and other) specified exempt property from special ad valorem levies and special assessments on real property located outside cities and villages, but renders the otherwise exempt property liable for the capital costs of water supply and distribution systems, sewer systems, waterways and drainage improvements, street, highway, road and parkway improvements. Accordingly, the property in question would be exempt from the garbage, light and library charges. Such property would also be exempt from the water charges except that portion thereof levied to pay for the cost of capital construction. If the sewer charge relates to a town or county district formed pursuant to general law, the property would be exempt therefrom except for the capital cost of construction. However, if the charges are imposed pursuant to a local law, the property in question would be liable for such charges in accordance with the local law.

The applicant has also filed form EA 74-4 seeking cancellation of similar assessments and special ad valorem levies made during the year 1976, which have not been paid, and has further filed form EA 74-6 seeking a refund of such charges which were paid during the previous six years.

Title 3 of Article 5 of the Real Property Tax Law does not authorize the administrative correction of unlawful entries in relation to wholly exempt real property at any time subsequent to the levy thereof.

Specifically, subdivision 6 of section 550 defines “unlawful entry” as meaning:

(a) an entry on the taxable portion of the assessment roll, or the tax roll, or both, of the assessed valuation of real property which, except for the provisions of section four hundred ninety of this chapter, is wholly exempt from taxation; or

(b) an entry on an assessment roll or a tax roll, or both, of the assessed valuation of real property which is entirely outside the boundaries of the assessing unit, the school district or the special district in which the property is designated as being located; or

(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.

Sections 554 (relating to correction of tax rolls before payment) and 556 (relating to correction of tax rolls after payment and refunds by reason thereof) are limited in application to clerical errors and unlawful entries as defined in paragraphs (b) and (c) of subdivision 6 of section 550 which are set forth above.

Subsequent to extension of taxes, correction of an unlawful entry as defined in paragraph (a) of subdivision 6 of section 550 may only be obtained in a legal proceeding commenced by the property owner. The apparent rationale is that the tax-levying body lacks the expertise to make determinations as to the taxable status of real property and that the property owner, having failed to pursue his administrative remedy (i.e., by making a timely application to the Board of Assessment Review which has such expertise), must pursue his judicial remedy.

December 30, 1976

NOTE:  Chapter 390 of the Laws of 1978 renumbered subdivisions (4), (5) and (6) of section 550 of the Real Property Tax Law to be subdivisions (5), (6), and (7).  Also, see Opinion 7-88.

Updated: