Volume 4 - Opinions of Counsel SBEA No. 71
Aged exemption (income requirement) (Federal “Foster Grandparent” program) - Real Property Tax Law, § 467:
For purposes of Real Property Tax Law, section 467 the hourly stipend paid under the Federal “Foster Grandparent” program is income; however, a reimbursement for out-of-pocket expenses under the same program is not income.
Our opinion has been requested as to whether money received by aged persons participating in the Federal “Foster Grandparent” program should be included in the computation of “income” for purposes of section 467 of the Real Property Tax Law which authorizes a partial exemption from real property taxation for residential real property owned by aged persons meeting certain requirements.
Subdivision 3 (a) of section 467 provides that no exemption shall be granted if the income of the applicant exceeds the limit set by the granting municipality (a figure not lower than $3,000 nor higher than $6,000) . Paragraph (a) further provides that “. . . income shall include social security and retirement benefits, interest, dividends, net rental income, salary or earnings, and net income from self-employment, but shall not include gifts or inheritances.”
Relying on the statutory language we have consistently stated that whether moneys received are taxable or non-taxable for federal or state income tax purposes is immaterial to the issue of inclusion or exclusion for purposes of this exemption statute. The legislative intent would appear to be to exclude persons from the benefits of this statute who have more than a set amount of cash accruing to them from all sources with which to meet expenses, excluding gifts and inheritances. In this connection attention is directed to a decision of the Court of Appeals where the matter was treated in part (Engle v. Talarico, 33 N.Y.2d 237, 306 N.E.2d 796, 351 N.Y.S.2d 677). The court stated, at page 679, that, “[T]he Legislature expressed no intention of incorporating the Federal or State tax rules into the exemption statute. Absent direction to the contrary, the term ‘income’, as used in the particular statute, must be judicially construed.” In its decision the court supported a qualified “cash flow” concept, and specifically held that income does not include a return of capital, that, income tax rules notwithstanding, a depreciation deduction may not be allowed with respect to income producing property, and that capital gains may be offset by capital losses.
The “Foster Grandparent” program was one of several community service programs established by a federal statute, Public Law 93-29 (42 U.S.C. § 3044-b). Such programs were designed to provide opportunities for low-income persons aged 60 or over to render supportive person-to-person service in health, education, welfare, and related settings to children having exceptional needs, including services as “Foster Grandparents” to children receiving care in hospitals, homes for dependent and neglected children, or other establishments providing care for children with special needs. Income of participants is required to be below the Office of Economic Opportunity poverty levels.
It is noted that according to the Domestic Volunteer Service Act of 1973, Public Law 93-113, a participant’s stipend of $1.60 per hour was not to be considered as income subject to any tax or charge. The pertinent section reads:
§ 418. Notwithstanding any other provision of law, no payment for supportive services or reimbursement of out-of-pocket expenses made to persons serving pursuant to titles II [which includes the “Foster Grandparent” program] and III of this Act shall be subject to any tax or charge or be treated as wages or compensation for the purposes of unemployment, temporary disability, retirement, public assistance, or similar benefit payments, or minimum wage laws.
Whether the stipends paid to the “Foster Grandparents” are designated as wages, or merely supplemental income it appears that such payments are compensation to the program’s participants rather than payments intended to cover the expenses of the children cared for by these individuals. This distinction serves to distinguish this federal program from a New York State program whereby monthly payments are made to individuals for the care of “welfare children” living in the recipient’s home; the latter payments are specifically designated to cover the ordinary living expenses of such children and are not expected to constitute any profit to the taxpayer nor even any remuneration for his services in caring for these children, and hence we have stated that such payments are not “income” for purposes of section 467 (see, 2 Op.Counsel SBEA No. 6).
Based on the foregoing analysis of the meaning of “income” for purposes of section 467 and noting that the hourly stipend paid under the “Foster Grandparent” program is in the nature of “wages” which may be used to meet current household expenses, and further noting the general rule that an exemption statute is to be construed most strictly against the taxpayer, we are of the opinion that such payments made to aged persons participating in the Federal “Foster Grandparent” program should be considered in computing “income” for purposes of section 467. The hourly stipend paid under this program should be distinguished from moneys paid thereunder as reimbursement for out-of-pocket expenses. Following the logic of the above-cited court opinion (a return of capital is not income for purposes of section 467), and in keeping with the conclusion reached in the above-cited opinion of Counsel, a reimbursement for out-of-pocket expenses would not be “income” and should be excluded from the computation of income for purposes of section 467.
The above conclusions are further supported by a review of the legislative history of the “Foster Grandparent” program. Title VI of Public Laws 93-29 (effective May 3, 1973) amended section 611 (dealing with the “Foster Grandparent” program) of the Older Americans Act of 1965 to read as follows:
(d) Notwithstanding any other provision of law, no compensation provided to individual volunteers under this part shall be considered income for any purpose whatsoever.
Public Law 93-29 was repealed by Public Law 93-113, Title VI, § 604(a), October 1, 1973, 87 Stat. 417. This latter enactment, entitled the “Domestic Volunteer Service Act of 1973”, substantially reenacted those statutory provisions previously found in the Older Americans Act of 1965. However, Congress did not reenact the language of section 611(d), above but rather provided the language contained in section 418 of Public Law 93-113 set forth above.
In the case of Brewster v. Gage, 280 U.S. 327, 50 S.Ct. 115, 74 L. Ed. 457, the United States Supreme Court held that the deliberate selection in a statute of language differing from that of earlier acts on the subject indicated that a change of law was intended. In reenacting the “Foster Grandparent” program under Public Law 93-113 Congress could have used the language of section 611(d) of Public Law 93-29, to the effect that compensation paid under such program should not be considered “income for any purpose whatsoever.” Instead Congress adopted more specific language stating that such payments should not be treated as wages or compensation “. . . for the purposes of unemployment, temporary disability, retirement, public assistance or similar benefit payments, or minimum wage laws.” We are of the opinion, in accordance with Brewster v. Gage, supra, that in so amending the statutory language, that is, in going from the broad, all-inclusive language of section 611(d) of Public Law 93-29 to the restricted, rather specific terms of section 418 of Public Law 93-113, Congress intended to change prior law. As such, we must conclude that the aged exemption from real property taxation in New York State, authorized by section 467 of the Real Property Tax Law, is not a program embraced by section 418 of Public Law 93113, and therefore, based on our understanding of the term “income” as it has been interpreted for purposes of section 467, we are of the opinion that the hourly stipends paid to participants under the “Foster Grandparent” program are in the nature of “wages” and should therefore be considered income for purposes of the aged exemption.
April 4, 1974
NOTE: Construes law prior to (1) L.1992, c.145, which allowed the income of only one spouse to be considered under certain circumstances, and (2) L.1993, c.551, which provided that for purposes of this exemption, moneys earned under the federal foster grandparent program do not constitute income. Note also that the maximum income limitation has been repeatedly increased since this Opinion was issued.