Volume 5 - Opinions of Counsel SBEA No. 37
Nonprofit organizations exemption (generally) (local option to tax - governing board of school district); Taxes (enforcement) (city school districts) - Real Property Tax Law, §§ 421, 1332:
Pursuant to section 421(l)(b) of the Real Property Tax Law, as to school district taxes, it is the board of education of a city school district which has sole jurisdiction to implement the local option to tax real property belonging to certain nonprofit organizations.
Where the city school district adopts such a resolution and the city does not, the city must nevertheless enforce the school district taxes on such previously exempt real property should they become delinquent.
We have received an inquiry as to the potential rights and liabilities of certain municipal corporations concerned with the implementation of the optional authority to tax real property pursuant to paragraph (b) of subdivision 1 of section 421 (i.e., 420) of the Real Property Tax Law. The question presupposes the proper enactment by the board of education of a certain city school district of legislation making subject to taxation all real property within the district which is owned by nonprofit corporations or associations organized for scientific purposes. It is stated that the city is opposed to the enactment of any such legislation, and that the city has suggested that it will refuse to collect and enforce taxes levied by the school district against real property owned by such scientific organizations. It is further stated that the city contends that (1) the board of education is not the governing board of the school district and (2) the school district cannot require the city to collect school district taxes.
In our opinion, the contention that the board of education is not the “governing board” referred to in paragraph (b) of subdivision 1 of section 421 is without foundation. Subdivision 14 of section 2 of the Education Law defines board of education to include “by whatever name known the governing body charged with the general control, management and responsibility of the schools of a union free school district, central school district, central high school district, or of a city school district.” Subdivision 16 of section 2 of the Education Law defines city school district as:
(1) Any school district coterminous with a city on January first, nineteen hundred fifty; (2) any school district part of which was without and part of which was within a city on January first, nineteen hundred fifty, and which then-contained the whole or the greater portion of the children of the city between birth and eighteen years of age, as shown by the school census; and (3) any school district wholly within, but not coterminous with, a city on January first, nineteen hundred fifty, and which then contained the greater portion of the children of the city between birth and eighteen years of age, as shown by the school census.
Subdivision 3 of section 2503 of the Education Law provides that the board of education of a city school district “shall have in all respects the superintendence, management and control of the educational affairs of the districts, and, therefore, shall have all the powers reasonably necessary to exercise powers granted expressly or by implication and to discharge duties imposed expressly or by implication by this chapter or other statutes.”
The “municipal corporation” referred to in paragraph (b) of subdivision 1 of section 421 is defined in subdivision lO of section 102 of the Real Property Tax Law to include a school district. It is therefore clear that as to school district taxes and the implementation of the optional provisions of section 421, the board of education of the school district has sole jurisdiction to determine whether to implement the authority contained within paragraph (b) of subdivision 1. (See also, 1972, Op.Atty.Gen. 106.)
The second contention is that the school district cannot require the city to collect school district taxes from property which remains exempt on the city assessment roll but which has been made subject to taxation on a school district assessment roll pursuant to a valid resolution adopted pursuant to paragraph (b) of subdivision 1 of section 421. City school districts of cities with less than 125,000 inhabitants are governed by Article 51 of the Education Law. Such districts are commonly referred to as fiscally independent, and for purposes of the assessment of real property and the levy of taxes they are governed generally by Article 13 of the Real Property Tax Law and particularly by sections 1302, 1306, 1324, 1326, 1328 and 1332.
For the purpose of the levy and collection of school taxes, the assessed valuations of real property are ascertained from the latest final assessment roll of the city (Real Property Tax Law, §1302 (1)). In each year the city assessors prepare for each school district wholly or partly within such city a duplicate of that part of the assessment roll applying to such district. The city assessors deliver the appropriate portion of the assessment roll to the school authorities of each school district within five days after the completion and certification or verification of such assessment roll (Real Property Tax Law, §1302(2)). The city’s duty to provide the school district with the latest completed final assessment roll is absolute and nondiscretionary.
The taxable status date of the city is controlling for school district purposes (Real Property Tax Law, § 1302(3)) although apparently the school district may determine to use a prior year’s roll pursuant to subdivision 4 of section 1302, in which case the taxable status date for that roll is controlling.
Subdivision 2 of section 1306 provides that upon the completion of the necessary assessment rolls of the city and upon the adoption of the school district budget, the school authorities shall prepare or cause to be prepared a school tax roll for the tax required to be levied as stated in the budget. Not later than 90 days after the beginning of the school fiscal year, the school authorities confirm the school tax roll and annex the warrant for collection to such roll. Except for the necessary modifications relating to installment collections, the collecting officer is required to return the warrant within 90 days after the date of confirmation of the tax roll. Sections 1308 and 1318 make clear that all real property subject to taxation within the school district is liable for school district taxes and that the collecting officer is required to collect from every person named on the school tax roll the sum set opposite his name.
The law governing the office of school district tax collector can be found in section 2506 of the Education Law. Subdivision 1 thereof authorizes the board of education to appoint a school district tax collector to serve at its pleasure. Paragraph (a) of subdivision 2 of section 2506 authorizes the board of education and the governing board or body of the city to enter into an agreement whereby the collection of all school district taxes may be carried out by the city tax collector. While there may be some legal debate on the point, it would appear that when the city tax collector is acting as the school district tax collector pursuant to section 2506(2), he is acting as the agent of the school district. As such, the tax collector would certainly be subject to the general principles of personal liability which attach to the principal-agent relationship.
The subject of the collection of school district taxes requires some comment at this point. It is rather essential to note that for the most part the collection of real property taxes is a somewhat passive action whereby the collector receives and records payments and provides an accounting of the tax levy, collection and delinquencies which is forwarded to the tax enforcing agencies. It is true that there is vestigial authority for positive legal action to collect taxes (see, e.g., §1334), but such authority is rarely if ever exercised by any municipal corporation, including school districts. Thus, the concept of a city ordering a tax collector not to collect school district taxes from a particular owner is rather tortured. For a tax collector not to receive a properly tendered payment from the owner of real property would leave the collector open to suit for failure to perform his statutory duty (Public Officers Law, §36; Education Law, §306) as well as a lawsuit by the property owner to recover whatever interest and penalty may ensue because of the collector’s refusal to receive the payment.
A more plausible sequence of events can by hypothesized in regard to the ultimate enforcement of a tax which the owner has refused and failed to pay. Thus, if the owner of real property made subject to taxation pursuant to resolution of the school board pursuant to paragraph (b) of subdivision 1 of section 421 refuses to pay the city school district tax, such delinquency is returned to the city treasurer pursuant to section 1332, subdivision 2. The city then becomes the primary enforcing agency of the delinquency and ultimately the guarantor of the delinquency on behalf of the school district. Subdivision 5 of section 1332 sets forth a procedure whereby the city treasurer becomes responsible for receiving payment of school district taxes and for transmitting collected delinquencies to the school district. The last sentence of subdivision 5 contains the following direction:
In the event that the city or the county shall bid in or shall be deemed to have bid in any real property or tax lien at any sale of such property or such tax lien on account of any of such unpaid taxes, or in the event that within two years after the return of the statement of unpaid taxes no tax sale on account of any such unpaid taxes was held, the city tax enforcement officer or other appropriate city officer, or the county treasurer, as the case may be, shall pay over to the treasurer of the school district the amount of such unpaid taxes including interest, for which such property or such tax lien was sold, or would have been sold if a tax sale were held in accordance with law, after deducting therefrom the additional five per centum of the principal of and interest on such unpaid taxes, (emphasis supplied)
In regard to this provision, the Attorney General has rendered an informal opinion in which he states that the provision for payment to the school district by the city within two years is a nondiscretionary requirement that cannot be avoided by the city. The opinion states in part that “the purpose of this statute, of course, is to insure that the City School District will receive the full amount for unpaid school taxes upon the expiration of two years after the date of the return of unpaid school taxes to the city or the county” (1973, Op.Atty.Gen. 97).
It should be noted that the city school district has no enforcement power other than the vestigial authority to seek personal liability against the taxpayer, and that the enforcing authority is lodged in the city itself. A school district’s lack of authority to pursue the collection of delinquent taxes beyond the return date, would appear to be the obvious reason for requiring the city to pay over to the school district the amount of delinquencies within two years of that date.
In addition to the aforementioned Attorney General’s opinion, the proposition that the language of section 1332(5) is mandatory has been supported by at least one judicial decision (Board of Education of City School District of City of Peekskill v. Gambino, 154 N.Y.L.J., No. 87, p.21, col. 2 (11-4-65)), and two opinions of the State Comptroller (19 Op.State Compt. 412; 21 Op.State Compt. 150). In addition, it has long been the opinion of this office that the purpose of the amendment to section 1332(5) (L.1963, c.191), which added the two-year requirement, was to. require that tax enforcement be carried out promptly by cities.
Finally, all materials contained in the bill jacket for the amending statute clearly indicate that the purpose of the amendment was to require payment over to the city school district by the city or county treasurer within two years from the date of the return of unpaid taxes. (See, Governor’s Bill Jacket Collection, L. 1963, c.191. Legislative Reference Library, New York State Library, Albany, New York, 12224.) It is particularly instructive to review a portion of the memorandum in support of the bill, filed by the sponsor, Senator Dutton S. Peterson:
This bill would provide that the city or county would be required to pay the full amount of the unpaid school taxes after a period of two years even though the city or county did not conduct a tax sale in accordance with law.
Under present law, the failure of a county or city to enforce unpaid city school district taxes results in the city school district not receiving the amount of such unpaid taxes or having any further enforcement remedy. The city school district is not authorized to enforce the tax lien. This bill would require the city or county to either conduct the tax sale promptly in accordance with law, or pay to the city school district in full amount the unpaid taxes in the event a tax sale were not conducted within two years from the date of the return of unpaid taxes.
Accordingly, while it is certainly within the ability of a city to refuse to enforce delinquent taxes which have been returned to the city by a school district, it is our opinion that subdivision 5 of section 1332 clearly requires that the city pay over to the city school district any uncollected delinquencies which are outstanding for a period of two years subsequent to the date of the return of the unpaid taxes to the city. Thus, if the city were to refuse to enforce a delinquency against a property owner who has been validly subjected to taxation pursuant to paragraph (b) of subdivision 1 of section 421, it is our opinion that the school district could, upon the expiration of the two years subsequent to the return of the statement of unpaid taxes to the city, if necessary, commence legal action to require payment of the full amount of the unpaid tax from the city.
September 25, 1975