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Department of Taxation and Finance

Volume 9 - Opinions of Counsel SBEA No. 109

Opinions of Counsel index

Alternative veterans exemption (computation) (equalization) - Real Property Tax Law, § 458-a:

For purposes of computing the alternative veterans exemption, the “highest” equalization rate or special equalization rate since the “initial year” must be used, even if this inflates the exemption when subsequent rates are lower.

A question has arisen regarding the proper use of equalization rates to compute the alternative veterans exemption (RPTL, § 458-a). The statute provides, in pertinent part:

Qualifying residential real property shall be exempt from taxation to the extent of fifteen percent of the assessed value of such property; provided, however, that such exemption shall not exceed twelve thousand dollars or the product of twelve thousand dollars multiplied by the latest state equalization rate for the assessing unit . . ., whichever is less (subd. (2)(a), emphasis added).

The combat zone and disability rating portions of the exemption are similarly equalized (subd. (2)(b), (c)).

In conjunction with these provisions, the statute defines “latest state equalization rate” as:

(1) the equalization rate established by the state board pursuant to title one of article twelve of this chapter; or

(2) a special equalization rate as may be established by the state board for purposes of this section in the initial year; or

(3) in the event that the state board establishes an equalization rate or special equalization rate in any subsequent year which exceeds the state equalization rate or special equalization rate in the initial year, the highest of such rates (subd. (1)(f)(i), emphasis added) {1}

The “initial year” for this purpose is the year in which the exemption was authorized in the county, city, town or village, or 1989, whichever is later (subd. (1)(h)). The “initial year” for the town in question appears to have been 1989.

The assessment roll to which the inquiry relates is the 1992 assessment roll. The equalization rates and special equalization rates for alternative veterans exemption purposes {2} for the town in question from 1989 through 1992 are as follows: 

Equalization rates
YearEqualization RateSpecial Equalization Rate
1989 13.84 15.84
1990 12.95 None
1991 14.76 25.60
1992 11.51 12.61

Since the 1991 special equalization rate of 25.60 is higher than either the 1989 or 1992 equalization rates or special equalization rates, and since the law requires the “highest” such rate to be used, it appears that the1991 special rate of 25.60 must be used to compute the alternative veterans exemption until a higher rate is established.

We recognize that this conclusion results in an inflation of the exemption. However, we cannot escape the conclusion that this is exactly what the Legislature intended. The concept of using the “highest” rate was introduced into the law by chapter 903 of the Laws of 1990. {3}  The bill’s sponsor wrote in the Memorandum in Support:

The veterans real property tax exemption was enacted to reward those persons who served our country in the armed forces. Since the enactment of this law in 1985, in some localities due to increasing property values the value of this exemption has been significantly eroded. To this end, this bill simply prohibits the reduction of the exemption.

Correspondence between the sponsor and our office in 1989 indicates that the sponsor was fully aware of the implications of this bill. The sponsor wrote to us that one of his constituents had his exemption reduced in 1989 due to a reduction in the equalization rate, and asked us to explain why this had happened. We responded by letter, explaining that the statute had been so designed in order to ensure equal treatment between and among veterans. Apparently, the Legislature did not consider this a satisfactory justification for the exemption reduction.

Clearly, then, section 458-a(1)(f) was specifically intended to preclude reductions of the exemption due to reductions in equalization rates. That being so, the highest rate since 1989 (i.e., the 1991 special rate) should have been used to compute the alternative veterans exemptions on the 1992 roll.

March 5, 1993

NOTE:  Construes law prior to L.1996, c.477.

{1}  This provision is set forth as amended by chapter 316 of the Laws of 1992, effective November 1, 1992. Since chapter 316, a State Board proposal, was intended to clarify this provision, not to substantively change it, we shall respond to the question as if this amendment had been in effect on the taxable status date in question.

{2}  A special equalization rate may be established specifically for purposes of the alternative veterans exemption (9 NYCRR 186-3.5(a)(4); 186-3.8(c)).

{3}  This language was preserved essentially verbatim by chapter 316 of the Laws of 1992.