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Volume 6 - Opinions of Counsel SBEA No. 71

Opinions of Counsel index

Agricultural exemption (Federal acquisition) (roll-back tax) - Agriculture and Markets Law, § 305:

Where a portion of land receiving an agricultural value assessment under section 305 of the Agriculture and Markets Law is acquired by the Federal government by purchase or condemnation proceedings, a roll-back tax may not be imposed on the land acquired or retained, notwithstanding the fact that the acquired land may be converted to a use other than agricultural production.

We have been asked whether certain real property receiving an agricultural value assessment pursuant to the provisions of Article 25AA of the Agriculture and Markets Law will be subject to roll-back taxes as provided by section 305 in the event that the land is acquired by the Federal government for the Appalachian National Scenic Trail.

Any excess value over the “agricultural value” of land used in agricultural production may be exempt from real property taxation upon application by the owner thereof where the land (1) consists of 10 or more acres; (2) has been used in each of the preceding two years for production for sale of agricultural products having a gross average sales value of at least $10,000; and (3) is either located within an agricultural district (§ 305), or is subject to an eight-year commitment to continued agricultural production (§ 306). Upon satisfaction of these requirements certain additional non-tilled lands “used in direct support” of agricultural production may also qualify for this preferential assessment (9 NYCRR 194.2; 5 Op.Counsel SBEA No.32).

The roll-back provisions for land situated in an agricultural district are set forth in section 305(1)(e) which reads:

e. If any land within an agricultural district utilized for agricultural production is converted to a use other than agricultural production, each appropriate taxing jurisdiction shall compute an amount ascertained by applying the applicable tax rate for each of the preceding five years to the excess amount of assessed valuation of such land as set forth on the assessment rolls for such year as provided for in paragraphs a and b of this subdivision. Such amount shall be the roll-back taxes to be levied and collected on the first assessment roll prepared subsequent to such conversion in the same manner and at the same time as other taxes. If such converted land constitutes only a portion of a parcel described on the assessment roll, the assessor shall apportion the assessment of such parcel on the first assessment roll prepared subsequent to the conversion and enter the apportioned amount attributable to the portion converted as a separately assessed parcel on the assessment roll. Such apportionment shall be made for each of the years to which roll-back taxes apply. The assessor shall also apportion the agricultural value ceiling applicable to such parcel for each of the years to which roll-back taxes apply. The difference between such apportioned assessment of the portion converted and such apportioned agricultural value ceiling attributable thereto shall constitute the excess amount of value to which roll-back taxes shall apply for each applicable year.

Roll-back taxes shall be levied and collected on the first assessment roll prepared subsequent to such conversion in the same manner and at the same time as other taxes are imposed and levied on such roll.

Provided, however, that in the event that such land or any portion thereof is converted to a use other than agricultural production by virtue of a taking by eminent domain or other involuntary proceeding, except a tax sale, such land or any portion thereof involuntarily converted to uses other than agricultural production shall not be subject to roll-back taxes. In the event the land involuntarily converted to a use other than agricultural production constitutes only a portion of a parcel described on the assessment roll, the assessor shall apportion the assessment, and enter the portion involuntarily converted as a separately assessed parcel on the appropriate portion of the assessment roll. The assessor shall adjust the agricultural value ceiling attributable to the portion of the parcel not subject to the involuntary conversion by subtracting the proportionate part of the agricultural value ceiling attributable to the portion involuntarily converted.

Pursuant to the National Trails System Act (Public Law 90-543), section 7(e) (f) and (g), the Federal Government may acquire lands for the Appalachian National Scenic Trail by purchase, or condemnation proceedings may be utilized where all reasonable efforts to acquire such lands by negotiation have failed.

In the instant situation the intent is to purchase by negotiation 23.65 acres out of an approximately 200 acre farm, all of which presently is entitled to an agricultural value assessment. The subject land is situated in an agricultural district, formed under Article 25AA.

When agricultural land in an agricultural district is converted to a non-agricultural use, the agricultural land becomes subject to roll-back taxes for up to five years preceding the conversion. If only part of the land is converted to non-agricultural use, only the portion converted is subject to roll-back taxes (9 NYCRR 194.13). The roll-back is measured by the amount of taxes that would normally have been paid had an exemption not been granted. Roll-back taxes are to be levied against the particular property at the same time and in the same manner as other taxes are imposed and represent a tax lien against the land (9 NYCRR 194.13(d)).

In response to an inquiry as to whether a subsequent owner of committed land must file another commitment form for the next tax year, we have stated that an owner of land so committed desiring an agricultural value assessment next year must file a new eight year commitment. Further, if a new owner wishes to negate a commitment made by a prior owner without suffering the penalty tax (imposed following conversion of lands committed under §306), he must keep the land in an agricultural state and must not take advantage of the agricultural value assessment for whatever period the commitment would remain in force (4 Op.Counsel SBEA No. 13). A similar conclusion applies with respect to land receiving an agricultural value assessment located within an agricultural district. If a new owner of such land wishes to avoid paying a roll-back tax which might otherwise be levied on such land, he must not seek an agricultural value assessment for a period of five years from the time such assessment was last allowed and he must keep the land in an agricultural state during this five year period. The cited opinion of counsel has been further amplified in 6 Op.Counsel SBEA No. 66, where it is noted that with respect to committed land, a penalty tax must be imposed following an outward or affirmative act changing the use of the property, but that nonuse of the property for any purpose does not constitute a conversion. The same logic would be equally applicable as to whether a roll-back tax is to be imposed.

Accordingly, assuming (as we have been informed) that the character of the subject land remains unchanged following transfer of title, with no apparent conversion of the land under the new ownership, there would be no basis for imposing a roll-back tax. This would be so whether title was transferred to a public entity or to a private party.

If, however, following transfer of title, the subject land is converted so that its character is changed, under normal circumstances a roll-back tax must be imposed. In this regard both sections 305 and 306 provide one exception, that is, “in the event that such land or any portion thereof is converted to a use other than agricultural production by virtue of a taking by eminent domain or other involuntary proceedings, except a tax sale” no roll-back tax or penalty tax is to be imposed.

We are further informed by the correspondent that condemnation procedures are a last resort for acquisitions for the Appalachian Trail. The usual procedure, as in the instant case, is to negotiate a purchase price for a voluntary transfer. Irrespective of which procedure is utilized and whether the subject land is converted following acquisition by the Federal government, it appears that no roll-back tax may be imposed on the land acquired by the government. As a matter of Federal law, a municipality cannot tax property of the United States. The Federal government must be able to deal with its own property free from any interference that might result from the imposition of State and local taxes (McCulloch v. Maryland, 4 Wheat. 316, 4 L.Ed. 579; West v. Oklahoma Tax Comm., 334 U.S. 717, 68 S.Ct. 1223, 92 L.Ed. 1676). Moreover, New York Real Property Tax Law, section 400(1) specifically exempts from taxation real property owned by the Federal government. The tax immunity granted the Federal government is in accord with the common law doctrine of “sovereign immunity” whereby property owned by the Federal government may not be taxed by State or local governments unless there is Federal legislation expressly consenting to such taxation (U.S. v. Buffalo, 54F.2d 471(2d Cir); 7 Op.State Compt. 190). Absent a lien at the time of acquisition there is no question that taxes levied against a parcel may not be enforced against the sovereign (see, Matter of Melrose Avenue, 234 N.Y. 48, l36 N.E. 235; People v. City of New York, 20 Misc. 247, 198 N.Y.S. 860, aff’d. 207 App. Div. 322,201 N.Y.S.2d 431; In re Foreclosure of Tax Liens, 205 Misc.2d 76, 121 N.Y.S.2d 283).

June 11, 1979

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