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Volume 8 - Opinions of Counsel SBEA No. 49

Opinions of Counsel index

Special franchise assessment (tax credit) (revenues from the area of the town outside the village) - Real Property Tax Law, § 626:

The right to a credit for a franchise fee against town taxes levied on a special franchise assessment is not limited to the portion of town taxes attributable to that part of a special franchise in the town-outside-village area (TOV) where the franchise fee payable to the town is based upon the percentage of gross income from utility installations in the TOV.

We are asked whether the right to a credit pursuant to section 626 of the Real Property Tax Law [RPTL] for franchise fees paid, as against town taxes is limited to the portion of town taxes attributable to that part of a special franchise in the town-outside-village area (TOV) where the franchise fee payable to the town by a cable TV company is based upon the percentage of gross income from cable installations in the TOV.

Section 626 is not so limited. Simply stated, if the monies paid are “based upon a percentage of gross earnings or other income, a license fee or other sum of money on account of such special franchise . . ., which payment was in the nature of a tax”, a credit should be granted against the amount of the tax due the assessing unit. There is no authority for apportioning a special franchise assessment or the tax thereon among the various portions or areas of an assessing unit for purposes of the credit (see, People ex rel. N.Y., W. & B. Ry. Co. v. Hyde, 143 App.Div. 321, 128 N.Y.S. 115 (1st Dept. 1911), aff’d 204 N.Y. 666, 97 N.E. 1114 (1912)).

However, the credit is limited to general town charges. Certain town charges may not be imposed in the village area of a town {*}.

The breakdown of the town tax bill payable by a cable TV company is irrelevant to the determination of the credit. It is the nature (town-wide) and source (i.e., a levy on behalf of the town rather than one by a village) of the charge, rather than the formula for calculating the franchise fee payable to the town, which is controlling for purposes of section 626.

May 10, 1983


{*}  Examples of such charges include: (1) expenses necessary for the maintenance of a town board of health or for any expenditures authorized by such a town board (Public Health Law, §306(2)); and (2) certain expenditures for highways and bridges (Highway Law, §§277, 141).

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