Volume 5 - Opinions of Counsel SBEA No. 79
Aged exemption (income requirement) (interest on joint savings account) - Real Property Tax Law, § 467:
Savings account interest attributable to an applicant must be included when computing income for purposes of the aged exemption (Real Property Tax Law, § 467). Under Internal Revenue Service procedure, a statement (Form 1099) must be provided for designated recipients of interest income. Such statements are presumptive evidence that the indicated interest income is attributable to the person identified therein. While this presumption is rebuttable, the burden is on the applicant to show that he is not the actual owner of the entire interest payment reported.
We have received an inquiry concerning the income reporting requirement of section 467 of the Real Property Tax Law (aged exemption). It is stated that the applicant for the exemption maintains a joint savings account payable to either or the survivor of herself and another; and that for federal income tax purposes (as shown on Form 1099), the interest earned on the account is credited to the applicant. The question is whether one-half or the entire amount of interest earned should be included when computing the applicant’s income for purposes of section 467.
In order to be eligible for the exemption authorized under section 467, the income of an otherwise qualified applicant (and spouse) must not exceed the income limit set by a municipality adopting the exemption (a figure not less than $3,000 nor more than $6,500). The statute provides that, “income shall include social security and retirement benefits, interest, dividends, total gain from the sale or exchange of a capital asset which may be offset by a loss from the sale or exchange of a capital asset in the same income tax year, net rental income, salary or earnings and net income from self-employment, but shall not include a return of capital, gifts or inheritances” (subd. 3(a)). Therefore, savings account interest attributable to an applicant must be included when computing income for purposes of section 467.
The Legislature expressed no intention of incorporating the federal or state income tax rules into the exemption statute (Engle v. Talarico, 33 N.Y.2d 237, 306 N.E.2d 796, 351 N.Y.S.2d 677). Nonetheless, when an income tax return is filed, a copy of such return should be submitted by the applicant for exemption together with statements of payments made by the social security administration, rent receipts and other documents to substantiate the statement of income set forth in the application. The income tax return and supporting papers are to be used by the assessor as a guide in determining the applicant’s income for purposes of section 467.
For income tax purposes, as a general rule, a designated owner of property will be taxed on income from the property unless the facts and circumstances show that another person is the true or beneficial owner. In that case, the owner will be taxed accordingly. Under Federal Internal Revenue Service procedure, statements (Form 1099) must be provided for designated recipients of interest income. Instructions provided by the Service state that a recipient who is not the actual owner of the entire payment amount reported may file a return with the Service (Form 1087) showing the amount attributable to each of the other recipients.
Therefore, for purposes of section 467, it would appear that the nominee as indicated on Form 1099 is the recipient and owner of the indicated interest and such amount should be included when computing income for purposes of this section. In other words, such statement would be presumptive evidence that the stated interest income is attributable to the person identified therein. However, as indicated above, this presumption may be rebutted, in which case the burden is upon the applicant to show that he is not the actual owner of the entire payment amount reported.
June 8, 1976
NOTE: Construes law prior to L.1992, c.145, which allowed the income of only one spouse to be considered under certain circumstances. Note also that the maximum income limitation has been repeatedly increased since this Opinion was issued.