Volume 6 - Opinions of Counsel SBEA No. 40
Taxable status date (exemptions generally) (transfer after taxable status date) (transfer to non-exempt owner) - Real Property Tax Law, §§ 302, 520, 551, 553:
Effective January 1, 1979, formerly exempt real property transferred to a non-exempt owner after taxable status date is subject to a pro rata tax liability for taxes attributable to the fiscal year or years in which the transfer occurs. The assessed value of the formerly exempt property is to be added to the next tentative or final assessment roll and the pro rata tax collected at the same time as other taxes extended on that roll.
If an assessor, other than in New York City or Westchester County, changed the taxable status of an exempt property transferred prior to January 1, 1979, that change constitutes an “unlawful entry” as defined in section 550(7)(c).
Several questions have been raised in regard to chapter 635 of the Laws of 1978, which provides for the imposition of a pro rata tax liability on exempt real property transferred to a nonexempt owner after taxable status date (Real Property Tax Law, §520).
The first issue is the procedure to be followed (a) if a transfer occurred after taxable status date, 1978 and before January 1, 1979 (the effective date of chapter 635), and (b) if a transfer took place after January 1, 1979 but prior to taxable status date, 1979.
Chapter 635 of the Laws of 1978 took effect on January 1,1979 and applies only to transfers which occurred on or after the effective date; i.e., the taxable status of a parcel transferred from an exempt to a nonexempt owner prior to that date is not affected by its provisions. (Note that §494 continues to apply to New York City and, until January 1, 1979, was applicable in Westchester County). With respect to those transfers which occurred on or after January 1, 1979, chapter 635 applies regardless of when the ensuing taxable status date occurs.
The procedure to be followed for adding assessments to the assessment roll under chapter 635 is set forth in section 520 of the Real Property Tax Law. Essentially, it requires the use of the forms and procedures of the “Correction of Errors Law” (Real Property Tax Law, §§550-559) for the adding of omitted assessments to a roll (see especially, §§551 and 553).
More specifically, if the assessor learns of the transfer prior to the completion of the tentative assessment roll, the value of the property as of the date of transfer is to be added to that tentative assessment roll in accordance with the provisions of section 551. If he learns of the transfer after that date, but prior to the levy of taxes on the final assessment roll, the assessed value may be added to the final assessment roll as an omitted assessment in accordance with section 553 of the Real Property Tax Law. If the assessor learns of the transfer after the levy (or if he fails to add the property to the assessment roll prior to the levy of taxes), he must wait until the following tentative or final roll to make the appropriate entry (520(4)).
If an assessor (other than in New York City or Westchester County, see, §494) incorrectly made changes on the assessment roll relative to exempt parcels transferred to a nonexempt owner prior to January 1, 1979, the entry should be treated as an “unlawful entry” as defined in section 550, subdivision 7, paragraph c of the Real Property Tax Law; that is, an entry made by a person without the authority to make the entry. Since chapter 635 gave no authorization to assessors to change the entry of a previously exempt parcel transferred to a nonexempt owner until January 1,1979, an assessor who did so, acted ultra vires and the resulting assessment constitutes an “unlawful entry.”
The final question is the procedure for the assessment and pro rata taxation of exempt property transferred to a nonexempt owner after January 1, 1979. As we have already indicated, the procedure for entering the assessments on the assessment roll is set forth in sections 551 and 553. The statute does not envision entries being made on the roll throughout the course of the calendar year; that is, new entries are not made on the assessment roll at the time of each transfer. Rather, an orderly procedure with previously promulgated forms is to be followed.
With respect to the pro rata share of taxes, there will similarly not be year round billings to these new nonexempt owners. Section 520 of the Real Property Tax Law, in incorporating the procedures of the correction of errors provisions for changes on assessment rolls, also incorporated the procedures for the levy and collection of taxes raised from these transferred properties at the regularly scheduled collection periods (e.g., in January for county and town purposes and in September for non-city school purposes).
March 7, 1979