For purposes of the enhanced STAR exemption; exempt single lump-sum payments from litigation from the definition of "income"

BILL NUMBER:S7420

Title of bill

An act to amend the real property tax law, in relation to exempting certain lump-sum payments from inclusion as "income" for purposes of the enhanced school tax relief exemption

Purpose

To exclude single, lump-sum legal settlements from the definition of "income" for purposes of the enhanced STAR exemption under certain conditions.

Summary of provisions

Section 1 of the bill amends clause (C) of subparagraph (i) of paragraph (b) of subdivision 4 of section 425 of the real property tax (RPT) law to prevent the Department of Taxation and Finance or any local assessor from establishing an applicable income tax year that does not comply with the provisions of this clause.

Section 2 amends RPT §425(4)(b)(ii) to exclude a single lump-sum payment from a legal cause of action, provided it does not exceed twice the amount of the applicable income standard for the assessment roll, less attorney's fees.

Section 3 amends RPT §425(4)(b)(vi) to require documented proof of any legal settlement.

Section 4 provides that anyone who was denied eligibility in the Enhanced STAR program between January 1, 2011 and the effective date of this act, and who would have been eligible for the exemption pursuant to its provisions, may retroactively apply for the exemption within 180 days of the bill becoming law.

Section 5 provides the effective date.

Justification

The Enhanced STAR program provides vital property tax relief to New York's seniors and, in many cases, is the sole reason they can afford to remain in their homes. The sponsor is aware of situations where an otherwise eligible senior citizen was denied the Enhanced STAR exemption because a modest, one-time legal settlement was reflected as gross income in the year it was received. This seems an unwarranted denial because of a temporary increase in income that will have real consequences for senior citizens who are already struggling to get by on a fixed income. This legislation is needed to protect access to a vital tax exemption that is ever more important to New York's seniors in these difficult economic times.

Legislative history

New bill.

Fiscal implications

To be determined.

Effective date

This act shall take effect immediately, and the provisions of section one of this act shall be deemed to have been in full force and effect on and after January 1, 2011.