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Volume 6 - Opinions of Counsel SBEA No. 18

Opinions of Counsel index

Taxes (cancellation of lien) (charge-back of taxes) (Suffolk County) - Real Property Tax Law, § 556; Suffolk County Tax Act, § 40:

Where property erroneously listed as taxable due to the failure of the town board to notify the assessor of the transfer of title and the resulting change in taxable status, the town is liable for all taxes levied erroneously by each taxing unit which uses the assessment roll.

This opinion concerns the liability of a town in Suffolk County for a county charge-back of sums paid by the county for tax liens on exempt property erroneously listed as taxable.

On February 20, 1973 a parcel of real property was dedicated to the town. The town assessor, however, was apparently not notified of this fact and he continued to list the property as fully taxable on three succeeding assessment rolls. Taxes levied on this parcel on each of those rolls went unpaid and the county acquired tax liens thereon in each of the succeeding three years. In 1976 the error was discovered, and the County Treasurer took the necessary steps to cancel the tax liens. In so doing he has also charged-back to the town the full amount of the tax liens (i.e., for the unpaid county, town and school district taxes). We are asked whether he has authority to do this and, if so, whether the town can then charge-back the county and school district for their respective portions of the taxes erroneously levied in each year.

Section 40-c of the Suffolk County Tax Act gives the treasurer broad authority to cancel any tax sale which might be invalid, ineffectual or void. In pertinent part, the section reads as follows:

The county treasurer shall not convey any lands sold for taxes if he shall discover before the conveyance that the sale was for any cause invalid or ineffectual to give title to the lands sold, but he shall cancel the sale. . . . If the error originated with the town officers, the sum paid shall be a charge against the town from which the tax was returned. . .
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Where the county treasurer shall discover either before or after a conveyance that a sale to the county as provided by this article, was invalid or ineffectual as aforesaid, he shall cancel the same as aforesaid and charge or recharge the town as aforesaid . . . [emphasis added].

Referring specifically to the case before us, assuming that the town was using the parcel in question for a “public use,” within the meaning of section 406(1) of the Real Property Tax Law, a sale of such property for delinquent taxes would clearly be “invalid or ineffectual” within the meaning of section 40-c of the Suffolk County Tax Act. Therefore the County Treasurer was statutorily bound to cancel the sale and to charge-back the amount of the lien to “the town from which the tax was returned,” if the error originated with the town officers. In this instance, since the property was erroneously listed as taxable due to the failure of the town board to notify the assessor of the transfer of title (and the resulting change in taxable status), the error was clearly one which “originated with the town officers.” Therefore, the town is liable for all taxes levied erroneously by each local government in question (i.e., county, town, school district and any special district in which such property was located).

While this may seem to be a somewhat harsh result, there does not seem to be any authority, statutory, judicial, or administrative, which would indicate that the town’s liability for a charge-back of taxes (where such taxes were levied erroneously based upon an error which “originated with the town officers”) is limited to payments previously made by the County to the town alone. There also appears to be no authority for the town to charge-back the county and school for their respective portions of the taxes levied. Apparently, the law intended that assessing units which could have corrected an error in assessment (including an error in the determination of taxable status) prior to the levy of taxes thereon, where tax liens are ultimately sold against the property erroneously assessed, should bear the full financial burden for the taxes erroneously levied.

In the case of certain administrative refunds, the Real Property Tax Law does provide for a proration of charge-backs to each municipal corporation or special district which levied a tax (see, §556(6)). However, the provision in the Real Property Tax Law parallel to section 40-c of the Suffolk County Tax Act is similar to the latter Act in requiring the amount paid upon cancellation of a tax sale to be a charge to “the city or town from which the tax was returned” (§1030(2)).

April 14, 1977

Updated: