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 The opinion may no longer represent those views if, among other things, there have been subsequent court cases or statutory amendments that bear on the issues discussed in the opinion.

TAXES -- Mortgage Tax (distribution to newly incorporated village)

VILLAGES -- Incorporation (right to distribution of mortgage tax)

TAX LAW, §261(3); VILLAGE LAW, §2-234(1)(c): A newly incorporated village becomes entitled to payment of mortgage tax moneys the first day of June following the first day of January next succeeding the date of incorporation. 23 Opns St Comp, 1967, p 431 superseded to the extent inconsistent herewith.

You ask how mortgage tax moneys distributed to your town pursuant to Tax Law, §261(3) are required to be apportioned among the town and certain villages in the town for the period October 1, 1986 through March 31, 1987. The villages in question were incorporated in May of 1986.

Enclosed with your inquiry was a schedule setting forth a proposed apportionment of the tax moneys. That apportionment, which was based on the provisions of Tax Law, §261, appears to have been computed in a manner consistent with the view expressed in 23 Opns State Comp, 1967, p 431.

Tax Law, §261(3) prescribes the manner in which mortgage tax moneys are to be apportioned between a town and village. That statute states:

"* * *in a county in which a town contains within its limits an incorporated village, or portion thereof, the board of supervisors shall apportion to such village so much of the share credited to the town as the assessed value of said village or portion thereof bears to twice the total assessed valuation of the town. * * *"

Thus, each village within a town is to receive a share of the mortgage tax money allocated to the town. That share is based upon the proportion which the assessed valuation of the village bears to twice the total assessed valuation of the town as shown on the most recent town assessment roll existing when the apportionment is made (6 Opns St Comp, 1950, p 417).

In 23 Opns St Comp, 1967, supra, we concluded that a newly incorporated village is entitled to a proportionate share of mortgage taxes from the date of its incorporation. That opinion, which was based on subdivision (1)(a) of section §3-334 of the former Village Law, reached that conclusion because it found that section 3-334 did not fix any other date as controlling for that purpose. Upon reexamining the views expressed in 23 Opns St Comp, 1967, supra, however, we now conclude that the opinion is incorrect insofar as it concludes that a village's entitlement to mortgage tax moneys begins as of its date of incorporation.

Section 2-234 of the current Village Law contains the same provisions as its predecessor (section 3-334 of the former Village Law). Section 2-234 provides that the date of incorporation of a village shall be the date the Secretary of State files the report of incorporation and that, as of that date, a village is empowered to exercise certain enumerated powers, but not all. Specifically, subdivision one of section 2-234 of the Village Law provides:

"* * * The village shall be incorporated as of the date of filing of said report; provided, however, that such incorporation shall only become effective on the following dates for the following purposes:
a. from the date of incorporation:
(1) to perform any and all acts authorized in sections 2-236 through 2-250 inclusive, hereof
(2) to appoint a village clerk, treasurer, attorney, assessor
(3) to hold meetings of the board of trustees
(4) to appoint a zoning commission
(5) to engage necessary clerical assistants to the clerk
(6) to designate an official newspaper
(7) to fix the compensation of and to pay all salaries, fees, costs and disbursements in connection with any of the foregoing and to borrow... such money as may be needed to make such payments.
(8) such officers, commission and employees as are authorized by this paragraph shall have the power to perform their necessary duties.
b. from the first day of January next succeeding the date of incorporation:
(1) to perform all acts and fulfill all requirements of article fourteen, titles one and two of the real property tax law
(2) to perform all acts and fulfill all requirements of this chapter in the article entitled 'Finances'
(3) to pay all necessary costs and disbursements in connection with the foregoing and to borrow... such money as may be needed to make such payments.
c. from the first day of June following the first day of January next succeeding the date of incorporation, to have and exercise all the rights, powers, duties, privileges and immunities granted villages by the constitution or any other provision of law." [Emphasis added]

Thus, only those powers described in paragraph (a) of subdivision one of section 2-234 may be exercised by a village as of its date of incorporation.

In our opinion, the receipt of mortgage tax moneys is not among the powers which, pursuant to Village Law, §2-234(1)(a), may be exercised by a village as of its date of incorporation. Further, we do not believe that the collection of mortgage tax moneys is encompassed by subdivision 1(b) of that section. Rather, since a village's entitlement to mortgage tax moneys is a right granted by another provision of law (Tax Law, §261), we now believe that subdivision (1)(c) of section 2-234 determines the time of entitlement to mortgage tax moneys. Accordingly, it is our opinion that the date of entitlement to mortgage tax moneys is the first day of June following the first day of January next succeeding the date of incorporation.

Section 261(3) of the Tax Law requires that mortgage tax payments by the county be made twice annually. The first payment is to be made on or before June 15th for the preceding period of October 1st through March 31st. The second payment is to be made on or before December 15th for the preceding period of April 1st through September 30th. As noted, the villages involved in this inquiry were each incorporated in May of 1986. By virtue of the provisions of Village Law, §2-234, it is our opinion that these villages did not become entitled to payment of mortgage tax moneys until the first day of June following the first day of January next succeeding the date of incorporation. The date of entitlement to mortgage tax moneys for these villages, therefore, was June 1, 1987. Inasmuch as the payment period being considered, October 1, 1986 to March 31, 1987, preceded the date of entitlement, it is our opinion that the villages are not entitled to an apportioned share of these mortgage tax moneys.

To the extent that 23 Opns St Comp, 1967, supra, is inconsistent with the views expressed herein, it is hereby superseded.

April 19, 1988
Alan Simon, Esq., Town Attorney
Town of Ramapo

Warren E. Berbit, Esq., Village Attorney
Village of Montebello

Joseph E. Suarez, Esq., Village Attorney
Village of Chestnut Ridge