NYS ASSESSMENT CHALLENGED

/

Download GT Publication PDF

On July 20, 2017, in John L. Weslowski v. Assessor of Schenectady, the Supreme Court of New York, Appellate Division, Third Department, granted summary judgment to petitioners who asked a reduction of the tax assessment of their single-family dwelling, following its overvaluation by the Taxing Authority.

Petitioners bought their dwelling located in the City of Schenectady in June 2013. The seller listed the subject property for sale at the price of $149,000 in June 2011, and reduced one year later this price to $110,000. In June 2013 petitioners offered to purchase the house for the sum of $103,000, which was accepted by the precedent owner following the 30 unsuccessful showings during the last two years.

Only two weeks later, the Tax Authority assessed the subject property to $156,000 to determinate the property taxes. The new owners paid the corresponding taxes before seeking a reduction upon the ground that their property was overvalued according to Real Property Tax Law (RPTL) Article 7.

Petitioners took the case to Supreme Court to contest the assessment made by the Taxing Authority.

Private residences are annually assessed by an Assessor by referring to the subject property’s characteristics and the comparable sales.

Under the Article 7 a proceeding to review an assessment of real property, the proceeding shall be brought at a special term of the Supreme Court in the judicial district in which the assessment to be reviewed was made. Moreover, the grounds for reviewing an assessment shall be that the assessment to be reviewed is excessive, unequal or unlawful, or that real property is misclassified (RPTL 706).

In a previous tax certiorari proceeding, the Supreme Court of New York considered that “a rebuttable presumption of validity attaches to the valuation of property made by the taxing authority” (Matter of Board of Mgrs. Of French Oaks Condominium v. Town of Amherst, 23 NY3d 168, 174-175, 989 N.Y.S.2d 642, 12 N.E.3d 1072). Petitioners need to rebut the presumption to present substantial evidence to demonstrate that the subject property is overvalued. The minimal threshold is met by demonstrating the existence of a valid and credible dispute regarding valuation based on sound theory and objective data.

However, the Supreme Court has consistently held that evidence of a recent sale of the property is a highly reliable measure of value. Nevertheless, the subject property should not be purchased in any abnormal manner, such as, for example, in a related party sale. Otherwise the purchase price shouldn’t be taken as evidence of real assessment.

Thanks to the associate real estate broker affidavit who had been engaged to sell the subject property, together with their owns, petitioners offered evidence that the subject property was overvalued by the assessor. Indeed, the property was for sale since June 2011, and had been continuously, publicly and widely advertised on a multiple listing service throughout the Capital Region.

The Appellate Court affirmed the lower court’s decision by taking account the petitioners’ evidence presented. It finally selected two essential points to retain petitioners’ assessment:

  1. Supreme Court retains that the subject sale was an “arm’s length transaction” which means that is not explained away as abnormal by any fashion. It adds that this is the very best form of evidence.
  2. Supreme Court highlights that the appraiser’s method of valuation makes him unable to obtain reliable adjustments by referring to comparable sales. Indeed, this appraiser was unable to inspect the interior or exterior of the subject property, which prevented him from providing a fair and realistic value of the subject property.

The Supreme Court confirmed a reversal of the burden of proof in favor of petitioners. The Taxing Authority should refer to the purchase price when the subject property has been sold by an arm’s length transaction shortly before the assessment unless the transaction was not arms-length.

This case illustrates the way to contest an assessment made by the Taxing Authority used to calculate the Real Property Tax. Even if Taxing Authority has a presumption of validity attached to the valuation of properties, it’s possible for the owners to challenge this assessment by giving the proof of a recent sale in normal conditions. Under these circumstances, the Taxing Authority should refer to this purchase price to determine the amount of Real Property Tax due.

 

AGREEMENT EXECUTED IN CONJUNCTION WITH A WILL NOT ENFORCED

/

Download GT Publication PDF

On May 17, 2017, in Tretter v. Tretter,  the Supreme Court of New York, Appellate Division, Second Department, dismissed an action of a son (as plaintiff) against his mother (as defendant) to enforce a side agreement executed between the mother and her late husband in conjunction with a last will and testament (the “Will”), which stipulated that the Will would not be modified unless it was by mutual written consent of the husband and wife.  

Husband and wife entered into a written agreement (the “Agreement”) stating that each will execute a Will that leaves all their properties to the surviving spouse and then to their issue. In addition, husband and wife agreed, pursuant to such Agreement, that “they will not revoke the Wills executed by them this day, modify them by codicil, or execute any further Wills unless it is by the mutual written consent of the parties.”

The husband died two months later and according to the Agreement and the Will, the wife inherited all the properties of the husband. She then made certain inter vivos transfers during her life to her other children other than the plaintiff.

The son sued the mother to enforce the Agreement and therefore sought: (i) to render the prior gifts null and void; (ii) to prevent her from making further gifts during her life time, (iii)to prevent her from revising the Will; and (iv) to recover damages relating to the inter vivos gifts made. On

October 31st, 2014, the Supreme Court, Kings County (Toussaint, J.) denied his motion for a preliminary injunction. The son appealed the decision.

The Appellate court affirmed the lower court’s decision and dismissed the case. The court noted that “there is nothing in the unambiguous language of the agreement which prevents the defendant from making inter vivos gifts or transfers of assets she inherited from her husband” and further went on to preclude the son from maintaining an action predicated upon a breach of the agreement as it relates to the defendant's promise not to revoke or modify her will or execute a new will.

The case illustrates the point that careful consideration should go into succession planning. For example, if the father’s intent was to ultimately leave his assets to his children but to allow his wife to use such assets during her life, among other things, a trust could have been made that could have facilitated such wish. 

NYS – EXTENDING FILING DEADLINES

/

Download Detailed Client Alert PDF

As a result of the snowstorm, NYS has extended filing deadlines due March 15, 2017 to March 20, 2017. In general, no special relief needs to be requested; only that the tax returns need to be field by March 20, 2017. This would include, for example, the partnership tax return due March 15, 2017.

The exceptions to this relief include (i) remittances of income tax withheld by employers required to file NYS-1 and remittances of withholding tax or MCTMT required to be made by employers through the PromptTax system. Notice N-17-3 details the full announcement, which is reproduced below for your convenience.

FEDERAL – EXTENDED FILING DEADLINES

/

Download detailed client alert PDF

As a result of the snowstorm, the IRS has extended certain filing deadlines due March 15, 2017, including partnerships and S Corporations.

In order to take advantage of this extension, taxpayers must file Form 7004 (Extension Request) on or before March 20, 2017. The taxpayer should write “Winter Storm Stella” on their form.

IR-2017-61 provides details the full announcement, which is reproduced below for your convenience.

NYS – CHANGE IN FILING DEADLINES

/

Download Detailed Client Alert PDF

As a friendly reminder, to match changes to federal income tax return deadlines, New York State has made the following changes to state income tax returns for calendar year 2016:

  • Partnerships: the new due date is 3/15;
  • S Corporations: no change;
  • Corporations: the new date is 4/15;
  • Trusts: no change.

Please further note the following:

  • The return deadline for IT-204-LL (for partnerships and limited liability companies which are disregarded entities, which have New York Source income or expense) is 3/15.
  • There were certain changes relating to the mandatory first installment payment for certain corporations.

The details of these changes are described under New York State  Department of Taxation and Finance Technical Memorandums TSB-M-16(9)C, (7)l and TSB-M-16(10)C, which are attached hereto.