To help our clients navigate the coronavirus (COVID-19) outbreak, Keane & Beane is providing Legal Alerts on a variety of issues as they are presented. The information contained in this Legal Alert is applicable as of today, April 23, 2020.
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With real property tax collection for Westchester-based cities, towns and special districts underway, and with the April 30, 2020 deadline for real property tax payments approaching, Governor Cuomo issued Executive Order 202.22 on Monday, April 20, 2020. This Executive Order contains provisions specific to tax collection within Westchester County and authorizes a protocol under which taxpayers facing COVID-19 hardship may have up to July 15, 2020 to pay city, town and special district taxes without an imposition of interest that would otherwise be assessed as of May 1, 2020. A copy of Executive Order 202.22 is attached and may be accessed here.
This Legal Alert addresses the modifications made by Executive Order 202.22 to certain provisions of the Westchester County Tax Law, the Real Property Tax Law (the “RPTL”) and city codes impacting tax collection processes, including the imposition of tax penalties, within the County of Westchester. This office issued a previous Legal Alert, available here, which addressed how Executive Order 202.22 impacts the real property assessment procedures and timelines.
Tax Collection and Interest Penalties
Under Executive Order 202.22
Executive Order 202.22 permits individual cities and towns, through their respective mayors and supervisors, to enter into agreements with the Westchester County Executive, under which the County will reduce the share of County taxes collected by these municipalities that is to be tendered on May 25, 2020. This share may be reduced, so long as the municipality provides qualified taxpayers a grace period until July 15, 2020 to pay County, city, town and special district taxes without penalty.
The Executive Order accomplishes this end by suspending Sections 283.291 and 283.221 of the Laws of Westchester County and Section 1512(1) of the RPTL, as follows.
By suspending Section 283.221 of the Westchester County Tax Law—which sets forth the schedule of interest penalties to be charged for taxes paid after April 30th —the County Executive has been empowered to determine whether penalties may be waived by a particular city or town depending on whether the County Executive’s hardship relief program is implemented by that municipality.
Section 1512(1) of the RPTL and Section 283.291 of the Westchester County Tax Law—which direct cities and town supervisors to transfer Westchester County taxes collected by these municipalities to Westchester County on a specified timetable—are also suspended so that the County Executive may negotiate, with any city mayor or town supervisor, a lesser percentage of taxes than would otherwise be due to Westchester County on May 25th (these provisions mandate that 60% of the taxes being collected for the County be paid over on that date).
Section 283.21 of the Westchester County Tax Law and Section 1512(1) of the RPTL and any penalty provision within a city code are further suspended to require town supervisors and allow city mayors to waive penalties for any County, city, town and special district taxes and assessments for a period up to July 15, 2020, provided the County Executive’s hardship relief program is in use by that municipality.
Taken together, the suspension of these provisions, and the authority placed in the County Executive to negotiate with city mayors and town supervisors under the terms of Executive Order 202.22, create the following process: (1) those cities and towns that wish to relieve themselves of the obligation to pay over to the County the 60% share of County taxes due under the 2020 levy can, through their respective mayors and supervisors, negotiate with the County Executive to reduce the amount of this required payment; however, (2) an absolute condition of any negotiated reduction will be the application of hardship provisions, formulated by the County Executive, that will allow eligible taxpayers to pay County/city/town taxes due April 30, 2020 without an interest penalty up to July 15, 2020 (the “grace period”).
As set forth in the text of the Executive Order, the negotiation process is one to be conducted between the County Executive, city mayors and town supervisors only. Thus, if relief from the 60% payment requirement is pursued, a city or town, through its mayor or supervisor, must direct implementation of the County Executive’s hardship criteria and protocol. This does not entail action by the governing body of a participating city or town.
Certification of Economic Hardship
After the issuance of Executive Order 202.22, Westchester County Executive George Latimer issued a Memorandum to city mayors and town supervisors that sets forth the guidelines under which this Executive Order will be administered. A copy of this Memorandum is annexed to this Legal Alert.
Under these guidelines, an individual taxpayer may certify that the taxpayer is undergoing an “economic hardship” for the purposes of the July 15, 2020 “grace period” for payment of taxes without penalty. The criteria are as follows:
For a residential taxpayer to be eligible, he/she must:
- Pay their property taxes directly, not through a bank or mortgage escrow account;
- Be enrolled in the STAR program and fully qualified for STAR benefits; and
- Complete a single-page form attesting to their status of hardship, based on loss of wages, closure of business or other similar loss related to the COVID-19 outbreak.
For taxpayers that are business organizations (such as corporations, LLCs or LLPs), to be eligible, the business organization must:
- Have had less than $1,000,000 net income in the prior year; and
- Complete a single-page form attesting to their loss of substantial income as a result of the coronavirus state of emergency or orders issued by the federal, state of local government that have closed or restricted the operations of the business.
For individual taxpayers who own rental properties, the owner must:
- Own no more than six rental units, in Westchester County or elsewhere, all of which must be residential;
- Pay their property taxes directly, not through a bank or mortgage escrow account; and
- Complete a single-page form attesting that:
- Since April 1, 2020, they have not received at least 50% of contractual rents; and
- This loss of rent is a result of their tenants having been laid off, furloughed or lost employment as a result of the coronavirus state of emergency or orders issued by the federal, state or local government in connection with same.
Notably, for all eligible entities as set forth above, the taxpayer’s signature on the certification form constitutes an attestation that they have incurred an “economic hardship”, under the threat of perjury. This is intended to render this portion of a request for hardship relief presumptively valid.
Implementation of this program will fall to the local municipality. However, the County Executive advises in his Memorandum that the implementation will be straightforward.
As set forth above, as the individual taxpayer is “certifying” economic hardship, a city or town need only verify that an applicant is enrolled in STAR, and to check whether an escrow entity is responsible for paying property taxes. Acceptance of the respective signed certification form is the only additional document required. The County has drafted forms that can be used by the taxpayers claiming hardship, copies of which are also attached to this Legal Alert.
Once the certification is accepted, the municipality must make efforts to ensure that no penalties or late fees attach to those taxpayers who do not make payment by April 30, 2020. The method by which this may be accomplished is likely dependent upon the individual municipality’s tax collection system.
If the city or town, through its mayor or supervisor, has availed itself of negotiating a reduced County payment by May 25, 2020, those officials within the city or town responsible for tax collection will be obligated to adhere to the process specified by the County Executive.
The Executive Order and the County Executive’s hardship program do not require tax collectors to accept partial payments. It only allows for eligible taxpayers to obtain the benefit of the grace period.
Moreover, the Executive Order and the County Executive’s hardship program do not authorize or allow a temporary refund or return of tax payments already made. April 30, 2020 remains the deadline for the remittance of County, city, town and special district taxes. The only relief afforded to qualifying taxpayers is the benefit of the grace period.
Deadline for Contacting the County to Participate
Should a city or town be interested in taking advantage of this program, the County Executive has established a deadline of Friday, April 24, 2020 at 12 noon by which the municipality must contact Ms. Joan McDonald, at (914) 995-2990 to set up a conference call to determine if they wish to enter into such agreement with the County. If you have any questions about the Executive Order, its impact on tax collection, certification of economic hardship or implementation of the County program, please contact Judson K. Siebert, Suzanne E. Volpe or any other attorney in our Municipal Law Practice Group.
Prior Keane & Beane Covid-19 Legal Alerts
Keane & Beane, P.C. has prepared several Legal Alerts concerning the Federal and State response to COVID-19 and the impacts on employers and local governments. Our Legal Alerts are available here.