Opinion 90-3


This opinion represents the views of the Office of the State Comptroller at the time it was rendered. The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.


SALES TAX -- Distribution (method of computing full valuation)
REAL PROPERTY TAXES AND ASSESSMENTS -- County Taxes (method of computing full valuation)

TAX LAW, §1262(d),(f); REAL PROPERTY TAX LAW, §§840(1), 844(1): In the absence of a special act requiring otherwise, the allocation of county sales tax revenue to cities and towns required by Tax Law, §1262(d) should be made on the basis of the full valuations used to apportion the county real property tax. When the full valuations used to apportion the county real property tax are determined pursuant to Title 2 of Article 8 of the Real Property Tax Law, the determination of the full valuations for purposes of Tax Law, §1262(d) should be made by dividing the county equalization rate into the taxable assessed value of taxable real property calculated by: excluding real property wholly exempt from county taxation; using the total assessed value of property partially exempt from county taxation pursuant to sections 458, 460 and 464 of the Real Property Tax Law and such other sections of law as may be designated by the county legislative body; and using the taxable assessed value of all other real property. When a village elects direct cash payment and sales tax is allocated to that village, the full valuation of the village should be computed by dividing the assessed value for county purposes of the property in the village as listed on the town assessment roll by the county equalization rate established for that roll. 1979 Opns St Comp No. 79-833, unreported, superseded to the extent it may imply that the full valuation of taxable real property in a village is determined pursuant to Article 8 of the Real Property Tax Law.

We have been asked whether the allocation of county sales tax revenue required by Tax Law, §1262(d) should be made on the basis of the full valuations used to apportion the county real property tax. We have also been asked whether the full valuations used to allocate sales tax revenue should be determined using the total assessed value or taxable assessed value of real property partially exempt from taxation for county purposes. The county in question apportions its real property tax using full valuations determined pursuant to Title 2 of Article 8 of the Real Property Tax Law.

Tax Law, §1262(d) provides that when a county and a city within the county both impose a sales tax, and the city preempts a portion of the county tax in that city, so that the county sales tax is greater in the rest of the county outside the city, the net collections received by the county from the additional rate outside of the city must be allocated quarterly to the other cities and towns in the county "on the basis of the ratio which the full valuation of real property in each city or town bears to the aggregate full valuation of real property in all of the cities and towns in such area" (emphasisadded). The amount allocated to each town must be applied first to reduce county taxes levied within the town, and then to reduce general town taxes, unless the town or any village situated in the town exercises the authority to elect to receive a direct payment of the amount which would otherwise be applied to reduce county and general town taxes levied within such town or village (see 1986 Opns St Comp No. 86-1, p 1). When a village elects to be paid directly its share of county sales tax revenue, the village must receive a portion of the sales tax revenue allocated to the town in which the village is located. Its portion of the town's share will be equal to "the ratio that the full valuation of real property in the village... bears to the full valuation of real property in the entire town" (emphasis added).

For the above purposes, Tax Law, §1262(f)(3) defines the term "full valuation of real property" as "[t]he assessed valuation of real property divided by the equalization rate as determined in accordance with article eight of the real property tax law." The term "assessed valuation of real property" is not defined in the Tax Law (cf. Real Property Tax Law, §102[2], defining the term "assessment" for purposes of real property taxation). We note, however, that a city or town's share of county sales tax revenue, and the amount of the county real property tax levied in the city or town, are based upon similar determinations of full valuation (see Tax Law, §1262[f][3]; compare Real Property Tax Law, §§804[1], 844[1]). Further, as noted, the sales tax revenue allocated to a city or town are used to offset the amount of the county real property tax levied in the city or town in the absence of an election to receive cash (see Tax Law, §1262[d]; see also Tax Law, §1262[c]). Therefore, since a city or town's share of county sales tax revenue and its share of the county real property tax are based on similar determinations of full valuation, and the sales tax revenue to which a city or town is entitled can be used to offset its county real property tax liability, we believe that the same full valuations should be used to determine both the city or town's share of county sales tax revenue and its share of the county real property tax (see 1979 Opns St Comp No. 79-833, unreported), in the absence of a special act providing otherwise (see 1979 Opns St Comp No. 79-536, unreported, concluding that in Nassau County, wherein the county charter requires county assessing and, therefore, prohibits equalization among the towns and cities in the county, the allocation required by Tax Law, §1262[d] should be made on the basis of the assessed valuation of taxable real property).

Article 8 of the Real Property Tax Law governs the determination of the full valuations used to apportion the county real property tax among the cities and towns within a county. Title 1 of Article 8 (Real Property Tax Law, §800 et seq.) requires the full valuations to be determined by dividing county equalization rates, determined by the county governing board or commissioners of equalization acting as the county equalization agency, into the "assessed valuation" of "taxable real property" (see Real Property Tax Law, §§800, 802, 804[1]). Title 2 of Article 8 (Real Property Tax Law, §840 et seq.), added by chapter 280 of the Laws of 1985, provides an optional procedure whereby the full valuations used to apportion the county real property tax are determined by dividing county equalization rates, determined by the State Board of Equalization and Assessment, into the "taxable assessed value of taxable real property" (Real Property Tax Law, §§840[1], 842, 844[1]). Therefore, since the same full valuations should be used to determine both a city or town's share of county sales tax revenues and its share of the county real property tax, we believe that the determination of the "full valuation of real property" pursuant to Tax Law, §1262(f)(3) should be made by dividing county equalization rates into the "assessed valuation" of "taxable real property" in those counties having equalization rates determined pursuant to Title 1 of Article 8 of the Real Property Tax Law. In those counties where the equalization rate is determined pursuant to Title 2 of Article 8, the equalization rate should be divided into the "taxable assessed value of taxable real property".

Section 844(1) of Title 2 of Article 8 of the Real Property Tax Law, provides as follows:

In any county to which [this title] is applicable, county taxes shall be apportioned among the cites and towns within the county on the basis of the proportion of the total full valuation of taxable real property within the county which is located within each city and town. This total valuation shall be determined by dividing the taxable assessed value of taxable real property by the appropriate city or town equalization rate as certified by the state board pursuant to [this title]. For purposes of this section: (a) taxable real property excludes real property which, by statute, is wholly exempt from county taxation, (b) taxable assessed value is limited to the assessed value actually subject county taxation except that it also includes the amount of assessed value partially exempt from county taxation pursuant to (i) [RPTL, §§458, 460 and 464], and (ii) such other sections of law as the county legislature designates by resolution to be included in the total valuation (emphasis added).

Thus, in a county subject to Title 2 of Article 8, the full valuations used to apportion the county real property tax and, hence, those that should be used to allocate county sales tax revenues among the cities and towns within the county, are determined by dividing the "taxable assessed value" of the "taxable real property" in a city or town by the county equalization rate for that city or town certified by the State Board of Equalization and Assessment. For this purpose, "taxable real property" excludes property wholly exempt from county taxation. "Taxable assessed value" means the assessed value actually subject to taxation by the county plus (1) the amount of assessed value partially exempt from county taxation pursuant to sections 458 (veterans), 460 (clergy) and 464 (incorporated associations of volunteer firemen) of the Real Property Tax Law and (2) the amount of assessed value partially exempt pursuant to such other sections of law as designated by the county legislature.

Finally, we note that when Tax Law, §1262(d) requires sales tax revenue to be allocated to a village on the basis of the proportion that the full valuation of the real property in the village bears to that in the town as a whole, the allocation cannot be made on the basis of the full valuations used to apportion the county property tax because county taxes are apportioned among cities and towns (see Real Property Tax Law, §§804[1], 844[1]), not villages. Thus, neither Title 1 nor Title 2 of Article 8 of the Real Property Tax Law authorizes or requires the determination of the full valuation of the taxable real property in a village for purposes of county tax apportionment. Nonetheless, Tax Law, §1262(d) does require that there be a determination of the ratio of the full valuation in the village to the full valuation in the town. In this situation, lacking a clear statutory standard, we believe that the full valuation in the village should be determined in the manner most consistent with the determination of the full valuation in the town as a whole; that is, by dividing the assessed valuation for county purposes of the taxable real property in the village as listed on the town assessment roll, by the county equalization rate established for that assessment roll (see Village of Fort Plain v Levandosky, n.o.r., Supreme Court, Montgomery County, January 25, 1978; 1977 Opns St Comp No. 77-785, unreported; 6 Op. Counsel SBEA No. 6). Consistent with the previous conclusions herein, the assessed valuation of real property partially exempt from county taxation should be utilized in the same manner as in the determination of the full valuations pursuant to Article 8. We hereby supersede Opn No. 79-833, supra, to the extent it may imply that the full valuation of taxable real property in a village is determined pursuant to Article 8 of the Real Property Tax Law.

February 23, 1990
Cornelius F. Healy
Deputy State Comptroller