RAQs: Recently Asked Questions

Topic: Tax Assessment Changes - 1/3/2020
We are an association Library that uses a school ballot to levy funding. We have received a bill f...
Posted: Friday, January 3, 2020 Permalink

MEMBER QUESTION

We are an association Library that uses a school ballot to levy funding. We have received a bill from the school for 2 years now that a landowner has had their taxes re-accessed back 3 years and now we owe the school money. Last year we paid it because it seemed like bad luck and there weas court documents saying the back money was owed. It seems to becoming a trend as another large land owner/company has done the same and now we owe again this year, and it's increasing. How do we continue to handle this trend and do we owe them?

WNYLRC ATTORNEY'S RESPONSE

Imagine walking through a metal maze, wearing magnet shoes, trying to solve a Rubik's Cube coated in honey.

Visualizing that? Metal floor.  Magnet shoes.  Lots of honey.

Okay.

This…is an even stickier problem.

Why is it sticky?  Because for any library but a school district library, there is no definitive answer.

To show you why, let me extract you from the metal maze and bring you into the weeds of New York's Real Property Tax Law ("RPTL") Section 726.[1]

Specifically, let's look at Section 726, sub-section 1(c), which controls a school district's refund of taxes paid by those who have successfully fought to reduce their property assessment.

Since 2014, this portion of the RPTL has given tax-levying school districts the following authority:

"A school district which levies taxes on behalf of a school district public library [that must be refunded to a taxpayer] may charge back to such public library the portion of such refund attributable to library purposes."

Prior to 2014, school districts had no such express authority.  The law was silent on this topic. This lead the New York State Comptroller to write three decisive opinions (in 1975, 1979, and 1995) stating that school districts who levied funds for public libraries did NOT have that authority.[2]  In other words, if a refund was owed: the district was stuck.

So stalwart was the Comptroller's stance on this ("Comptroller" just sounds like someone in charge, right?) that in 2007, it was cited by the NY Commissioner of Education when they decided that a school district's attempt to "charge back" an association library's portion of a refund--by withholding an equivalent amount from the following year's levy--was forbidden.[3]

So, there we were until 2014: a Comptroller-confirmed approached that was a great deal for libraries.

But not such a great deal for New York's school districts, right? When a refund came a-knocking, they were left holding the bag.

By 2014, the complaints had gotten so loud, the Assembly added the above-quoted section to RPTL 726, while commenting:

Existing law is silent on whether a school district may charge back court ordered refunds. Opinions of the State Comptroller (95-15, 79-103, 75-1210) have consistently, held that school districts are lacking in the necessary statutory authority. This legislation corrects an apparent oversight in Real Property Tax Low [sic]. It was never the intent of the Legislature to prohibit school districts %% inch[sic] levy taxes on behalf of a school district public library from apportioning the library portion of certiorata and small claims assessment review refunds to such libraries. The inequity of requiring a school district to refund a library's share of tax certiorari debt from the school district's own resources is clear.[4]

From a certain point of view, legislation to correct this "inequity" makes a lot of sense.  If you're running a school district, you're probably already struggling to get new orchestra instruments.  Now out of the blue you have to issue a tax refund to the local over-assessed big box store?  The last thing you want to do is also eat the portion owed by the local library.  Good thing the legislature fixed that, right?

But a sharp reader has probably noticed: in trying to clear up one problem, the legislature created another.

What does that language in 726 (c)1 say, exactly?

"A school district which levies taxes on behalf of a school district public library [that must be refunded to a taxpayer] may charge back to such public library the portion of such refund attributable to library purposes."

What's the problem here?  The black letter law of the new section of 726(c)1 only names school district public libraries.  Association libraries, special district, municipal libraries--these are all left out. And even though there are sections of the Education Law where "all types of libraries [are] treated equally,"[5]  and school districts can levy taxes for any kind of library,[6] without clear authority to indicate anything different, I would not be comfortable stating that the new section of 726(c)(1) has positioned school districts to charge back any taxes from anything other than a school district public library.  The language is just too specific.

So, when a non-school district public library gets a charge-back bill from a school district,[7] what's a public library do? 

First, as they say in the intergalactic travel biz: DON'T PANIC.  You'll figure something out.

Second: Gather your paperwork (the charge back bill, the court papers related to the Article 7 assessment challenge if you got them, and the most recent correspondence with the district).

Third: Assemble your team. Who is "your team"?  In New York, it should (at least) be: your Treasurer, your board chair (or other designated member/s), a rep from your system,[8] and a lawyer.[9]

Fourth: After an initial meeting, someone from your team might want chat with the assessor, and maintain some routine contact--you'll want some intel on how much more of this could happen. 

Fifth:  After gathering all the intel you can, your team should formulate a recommended "Response," to be authorized by the library's board. 

What will the Response authorized by the board provide?  I can't say.  Looking at the diversity of library-related legal cases, it is clear that New York's libraries are very diverse in their approach to taxes and risk.  Some, after assessing the validity of the back charge (and the resources needed to fight it), might just eat the cost.  Others might ask the Comptroller for an opinion about the 2014 change to the law, holding off on paying up until they get a reply.  And still others might attack the validity of the adjustment, or band together with other entities to formulate a broader strategy.

What is important is that whatever is done is based on good information, and a well-informed decision of the board.  Whatever strategy your library adopts, it should consider the relationship with the school district as a whole.  Remember, they didn't cause this mess.

Thank you for submitting this sticky question.  I wish my answer was simpler, but right now, the law does not allow for an easy response. 

Someday we'll take off the magnets and put down the honey.



[1] Yes, you're still holding the Rubik's Cube.  Don't worry, there are no bees in these weeds to be attracted by the honey.

[2] Opinions number 95-15, 79-103, and 75-1210.

[3] Decision No. 15,662.

[4] New York State Assembly Bill Search and Legislative Information for Bill Number A05310 (2014).

[5] Section 259, for instance, (which as commented by the Education Commissioner in the Croton Free Library decision), "provides that moneys received by a municipality or school district from taxes or other public sources are to be paid over to the treasurers" of all kinds of libraries just the same.

[6] A function of convention, more so than law; see the "Ask the Lawyer" on school tax levies: https://www.wnylrc.org/ask-the-lawyer/filter/52

[7] Do not confuse a charge-back bill from a school district with a charge-back bill from a municipality or other entity!  This commentary only pertains to school districts…in the year 2020…until there is some authority from the Comptroller, the courts, or the legislature to sort this mishegas out.

[8] Depending on what's happening in your region, this might not be their first charge-back rodeo.

[9] A lawyer is critical, because there is more than one kind of tax adjustment proceeding, and RPTL 726 only applies to adjustments under Article 7.  The lawyer's job will be to make sure the adjustment and charge back demand is legit (or not), and to assess the risks of paying (or not).

Tags: Taxes, Association Libraries, School Ballots

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The WNYLRC's "Ask the Lawyer" service is available to members of the Western New York Library Resources Council. It is not legal representation of individual members.