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 The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.
[Edited for Publication]
SALES TAX -- Distribution of (necessity of State Comptroller's approval in absence of sales tax agreement)
TAX LAW, §1262(c): In the absence of a sales tax agreement between a county and all of the cities within the county, the State Comptroller is not required to approve a distribution formula adopted by the county.
You state that a county imposes a three per cent (3%) sales tax and that the only city within the county currently pre-empts one-half (i.e., 1 1/2%) of the sales tax within the city pursuant to Tax Law, §1224(b). Therefore, the county is required, by Tax Law, §1262(d), to distribute one-half (i.e., 1 1/2%) of its sales tax receipts outside of the city to the towns within the county. We are informed that the county presently retains all of the sales tax receipts not subject to such mandatory distribution.
The city, however, has repealed its sales tax effective March 1, 1993. The county legislature has adopted a resolution, which provides that effective March, 1993, the county will retain 60% of the total county sales tax receipts returned to the county by New York State and that the remaining 40% will be allocated among the city, towns and villages. You have requested the State Comptroller's approval, pursuant to Tax Law, §1262(c), of the new distribution formula which is outlined in county's resolution.
Initially, we note that after the repeal of a city's pre-emptive sales tax, the county is under no obligation to pay any portion of the county sales tax to towns or cities. Therefore, absent the resolution adopted by the county, the county would receive one hundred per cent of the sales tax collected in the county after the city's sales tax ceases to be effective.
With respect to whether the State Comptroller's approval is required of the county's new distribution formula, we note that section 1262(c) provides that when there is no pre-emption of sales tax by a city, the allocation to cities and the area outside the cities may be based on population or "in such other proportion as may be agreed upon by the elective governing body of the county and of each of the cities in the county with the approval of the state comptroller". Thus, the Comptroller's approval is required only when a sales tax agreement is entered into between a county and the city (or cities) within the county.
In the instant situation, the city's local law which repeals its sales tax provides that the budget committee of the common council is authorized to negotiate an agreement for the allocation of county sales tax to the city, subject to approval by the council as a whole. You have informed us, however, that no sales tax agreement exists between the city and county. Consequently, this Office has no approval role with respect to the county's distribution formula set forth in its resolution.
November 12, 1992
Louis E. Wolfe, Esq., County Attorney
County of Clinton