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Volume 6 - Opinions of Counsel SBEA No. 56

Opinions of Counsel index

Veterans exemption (eligible funds) (enlistment allowance) (reenlistment bonus) - Real Property Tax Law, § 458:

Enlistment allowances and reenlistment bonuses do not constitute eligible funds for purposes of the veterans exemption (Real Property Tax Law, § 458).

Our opinion has been requested as to whether military enlistment allowances and reenlistment bonuses are eligible funds within the meaning of the veterans exemption statute (Real Property Tax Law, § 458).

As to an “enlistment allowance,” the State Tax Commission ruled that such moneys were not a bonus within the meaning of the statute, in a letter dated November 29, 1945, stating:

One of the necessary elements of a bonus is that it compensate a man for past services performed. (Ruling of the Department of Taxation and Finance, July 6, 1944.) It is my opinion that an enlistment allowance is not given for past services but rather as an inducement for future services although it is, in fact, measured by the length of past services.

Support for the position taken by the Tax Commission is also found in People v. Westchester County National Bank of Peekskill, 231 N.Y. 465, 132 N.E. 241, wherein the Court of Appeals indicated that a bonus is a reward for past services.

It is our opinion that an allowance termed a “reenlistment bonus” whereby payments are progressive depending on the reenlistment period, is not a true bonus in that it is not granted for past services performed (People v. Westchester Co. National Bank, supra; November 29, 1945 Opinion of the State Tax Commission, supra), but is an inducement for future services. In fact, since the amount of such bonus is not even measured by past services, but by future services, there is even less reason to call such an allowance a bonus than there is as to an enlistment allowance.

Accordingly, it is our opinion that a “reenlistment bonus” is not eligible funds within the meaning of section 458.

October 18, 1977

Updated: