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Volume 6 - Opinions of Counsel SBEA No. 60

Opinions of Counsel index

Taxes (collection) (reimbursement) - Real Property Tax Law, §§ 936, 1097:

A municipality which has credited or reimbursed other municipal corporations for unpaid taxes levied on property of a railroad corporation in bankruptcy may not, after acceptance of a compromise offer from the corporation, charge back towns and school/districts for their share of the taxes which are thereby rendered uncollectable.

Our opinion has been requested as to whether a municipality, such as a county, which has credited or reimbursed other municipal corporations for unpaid taxes levied on property of a railroad corporation in bankruptcy (pursuant to Real Property Tax Law, §§ 936 and 1330) may, after acceptance of a compromise offer from the railroad (Real Property Tax Law, § 1097), charge back towns and school districts for their share of the taxes which are thereby rendered uncollectable. Subdivision 5 of section 1332 relieves cities and counties of responsibility for advancing money to city school districts with respect to unpaid taxes on any property during the period when enforcement is restrained or prohibited by court order.

In general, town collecting officers are required to pay over to the town supervisor all moneys collected until the full amount of the town warrant is satisfied (Town Law, § 37( 1)). Thereafter, moneys are turned over to the county treasurer (id.) until the expiration of the warrant for collection. At that time, the collecting officer prepares a list of unpaid taxes which is delivered to the county treasurer who “credits” the collecting officer with the amount of unpaid delinquencies (Real Property Tax Law, § 936(1)). The county assumes subsequent responsibility for collection and enforcement of collection of those delinquencies. (See, e.g., Town of Amherst v. Erie County, 260 N.Y. 361, 183 N.E. 851.)

In the case of non-city school districts, the procedure is somewhat different, but the net result is that the county also acts as a “guarantor” of unpaid taxes. Pursuant to section 1330 of the Real Property Tax Law, upon the expiration of the school collector’s warrant, a list of unpaid taxes is prepared and delivered to the county treasurer for collection. By the first day of April next succeeding the return of unpaid taxes, the county treasurer must pay over to the appropriate school official the full amount of unpaid school taxes (§ 1330(4)).

With respect to both unpaid town and school taxes for which a county acts as guarantor, the liens for those taxes pass to the county and the county must bear the loss of this revenue unless or until it is able to enforce collection of the unpaid taxes. In In re Wadhams’ Estate, 249 App.Div. 271, 292 N.Y.S. 102 at 108, the court stated in reference to a county’s responsibility to reimburse a school district for unpaid taxes, “The county is legally bound to reimburse the school district for the amount of its uncollected school taxes. The direction to the county treasurer ... is fixed and conclusive; it is not dependent upon the collection of the tax by the county.” (emphasis added) (See also, Town of Amherst v. Erie County, supra.)

If the county is unable to recoup the advances made to a town or school district for unpaid taxes, for example, where the proceeds of the sale of the property fail to equal the total amount of taxes due, it is the reimbursing jurisdiction, i.e., the county, which suffers the loss in revenue. In this case, should the county accept a compromise offer from the railroad, it could not charge back municipalities which it had previously credited or reimbursed for their share of taxes lost.

May 31, 1977

Updated: