Volume 8 - Opinions of Counsel SBEA No. 58
Taxes (interest and penalties) (fees imposed on school taxes) - Education Law, § 2130; Real Property Tax Law, §§ 1328, 1330; Town Law, § 37:
Fees imposed by a town board in a town of the first class, on school taxes paid to the town’s receiver of taxes, should not be included as part of any unpaid tax in the collecting officer’s “return” list of unpaid taxes.
We have been asked if a town receiver of taxes and assessments should include in the return of unpaid taxes to the school district fees imposed by the town board pursuant to section 37(1) of the Town Law. Section 38(1) of the Town Law abolished the office of school district collector in towns of the first class, transferring the responsibilities of that office to the town receiver.
In considering the question of charges imposed for late payment of school taxes, it is important to understand the difference between and among various school tax collecting officials, who may be categorized as unsalaried or salaried, with the former including the “fee collector” and, in towns of the first class, the town receiver of taxes. The interest or fees payable and their status at the time of a county relevy of school taxes are directly dependent upon the type of tax collector.
A school tax collector who is compensated by a fixed salary (see, e.g., Education Law, §2130(4)), is required to collect interest which belongs to the district (and which, in part, reimburses the district for his salary) in accordance with the provisions of subdivision 2 of section 1328 of the Real Property Tax Law [RPTL].
In the case of an unsalaried “fee” collector, compensation is based upon the time of the receipt of a tax payment and the amount of school taxes collected. Pursuant to subdivision one of section 1328, the fee collector is entitled to one percent of the amount collected during the standard 30-day interest free period (see, RPTL, §1322(1)), and five percent “upon all sums collected by him thereafter”. In towns of the first class, the town receiver of taxes (a town officer; see, Town Law, §20(1)) is statutorily charged with the duty of collecting school taxes “unless there has been an agreement between the town board and the school board to the contrary” (Town Law, §37(1)). If the town receiver collects school taxes, the town may impose a fee or fees to be added to the school taxes, subject to a one percent limit during the first 30 days of tax collection, and a five percent maximum thereafter (id.).
Whatever the nature of any additional charge, the schedule of interest and fees for late payment has been enacted to encourage timely remittance of taxes. Local governments depend upon the timely flow of revenue, including tax collections, for meeting their day-to-day costs of operation.
However, in the case of the unsalaried school tax collector, fees serve a direct compensatory function as evidenced by their imposition even upon persons who make timely remittance of their tax bills. As previously noted, an unsalaried collecting officer “receive[s] for his services on all sums paid to him within the one month collection period . . . one per centum, and upon all sums collected by him thereafter, five per centum” (RPTL, §1328(1)). The section caption refers to this remuneration as a “collecting officer’s fees” (id.). Accordingly, the unsalaried collecting officer may not include the associated unpaid fees in the statement of unpaid taxes given to school authorities (RPTL, §1328(1)). This is understandable since the statement, as certified by the school authorities, serves as a notice to the county treasurer of the amount payable by the county to the school district (RPTL, §1330(4)). To do otherwise would produce a windfall for the school district since it has expended neither time nor money in the collection process. Similarly, the collecting officer would not be entitled to the fees since he is only compensated for those taxes he actually collects (RPTL, §1328(1)).
The function served by interest upon delinquent taxes, while primarily punitive, is compensatory as well. Unlike fees, which are collected upon both timely and delinquent payment of taxes (though at differing rates), interest is due only if payment is not timely made (i.e., after the first 30 days of the tax warrant). Section 1328(2) of the Real Property Tax Law states that the school tax collector, authorized to collect interest, receives a salary in accordance with the provisions of the Education Law. Accordingly, the collecting officer is appointed by the board of education which “fix[es] the compensation ... in lieu of all fees to which a[n unsalaried] school district collector might be entitled” (Education Law, §2130(4)).
The compensatory function of interest is shown by the fact that the salary of a school tax collector is paid by the school district. The inclusion, then, of interest upon unpaid taxes in the collecting officer’s statement, resulting in its payment to the school district by the county, has the effect of reimbursing the district, in part, for the collector’s salary.
With respect to the last category of school tax collecting officers, as previously noted, a town receiver of taxes and assessments is an officer of a town of the first class whose salary is fixed by the town board (Town Law §§20(1 )(a), 27(1)). Accordingly, compensation by fees would appear to be unauthorized. However, the collection of fees (those previously exacted by school district collectors or, in the alternative, those authorized by town board resolution under Town Law, §37( 1)) by a town receiver is expressly provided for in section 37(1) of the Town Law.
This seeming contradiction is resolved by reference to the above-discussed function of fees and interest. As the school district must be reimbursed, in part, for the salary it pays its tax collector, so, too, must the town be reimbursed for the services performed by its receiver of taxes and assessments on behalf of the school district. However, interest is reserved to a school district-appointed tax collector who receives, instead of fees, a fixed compensation (RPTL, §1328(2); Education Law, §§2130(4), 1805; 6 Op.Counsel SBEA No. 102). To remedy this, the town receiver is authorized to collect “fees . . . [which] shall belong to the town” (Town Law, §37(1)).
Finally, there is no legal basis for the inclusion of these fees in the return of the town receiver to the school district. Section 1330(1) of the Real Property Tax Law requires the inclusion of “interest” by a “collecting officer who received compensation in lieu of fees.” As set out above, a town receiver of taxes and assessments is not the collecting officer contemplated by this statute. Furthermore, the town receiver collects fees, not interest. If the receiver were to return the fees to the school district rather than the town, the school district would receive a windfall (not having paid the receiver’s salary) at the expense of the town (which did).
In view of the foregoing, we believe that a town receiver of taxes and assessments may not include in the return of unpaid taxes to the school district the fee(s) imposed by a town board pursuant to section 37(1) of the Town Law, and otherwise payable to the receiver during the term of the school tax warrant.
September 27, 1982