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§ 726. Refund of taxes. 1. If in a final order in any proceeding under
this article it is determined that the assessment reviewed was
excessive, unequal or unlawful, or that real property was misclassified,
and ordered or directed that the same be corrected or stricken from the
roll, and such order is not made in time to enable the assessors or
other appropriate officer, board or body to make a new or corrected
assessment or to strike such assessment from the roll prior to the
imposing of any tax or special ad valorem levy upon the real property
the assessment of which has been determined to be excessive, unequal or
unlawful, or which has been determined to be misclassified, then any
amount at any time collected upon such excessive, unequal or unlawful
assessment, or as a result of such misclassification shall be refunded
as follows:
(a) When such tax or other levy shall have been imposed by the board
of supervisors, there shall be audited and paid to the petitioner or
other person paying such tax or other levy in the same manner as county
charges, the amount paid by him in excess of the amount which would have
been paid had such assessment been made as determined by such order,
together with interest thereon as provided in subdivision two of this
section. So much of any tax or other levy, including interest thereon,
as shall be refunded which was imposed for city, town, village or
special district purposes, shall be charged to such city, town, village
or special district. So much of the amount of any tax or other levy,
including interest thereon, as shall be refunded which was imposed for
other than city, town, village or special district purposes, shall be a
general county charge; provided, however, that if the assessment is
reduced by such order by an amount not in excess of ten thousand
dollars, such portion of the amount refunded shall be charged to the
city or town in which the real property is situated. However, with
regard to condominiums, the amount paid by the petitioner or other
person paying such tax, in excess of the amount which would have been
paid had such assessment been made, as determined by such order, for
assessments other than city, town, village or special district purposes,
shall not be a city or town charge regardless of the amount of the
reduction in the assessment.
(b) When such tax or other levy shall have been imposed by the
appropriate board or body of any city, town or village, there shall be
audited and paid to the petitioner or other person paying such tax or
other levy in the same manner as city, town or village charges, as the
case may be, the amount paid by him in excess of the amount which would
have been paid had the assessment been made as determined by such order,
together with interest thereon as provided in subdivision two of this
section. So much of any tax or other levy, including interest thereon,
as shall be refunded which was imposed for city, town, village or
special district purposes, shall be charged to such city, town, village
or special district. So much of the amount of any tax or other levy,
including interest thereon, as shall be refunded which was imposed for
other than city, town, village or special district purposes, shall be a
general county charge; provided, however, that if the assessment is
reduced by such order by an amount not in excess of ten thousand
dollars, such portion of the amount refunded shall be charged to the
city or town in which the real property is situated. However, with
regard to condominium owners, the amount paid by the petitioner or other
person paying such tax, in excess of the amount which would have been
paid had such assessment been made, as determined by such order, for
assessments other than city, town, village or special district purposes,
shall not be a city or town charge regardless of the amount of the
reduction in the assessment.

(c) Any final order in a proceeding under article seven of this
chapter, which orders or directs the correction or striking of an
assessment appearing on that portion of a city, town or county
assessment roll applicable to a school district, shall be binding on
such school district. Any amount of taxes of such school district at any
time collected upon such assessment in excess of the amount which would
have been paid had such assessment been made as determined by such
order, shall be refunded by the school authorities of such school
district, together with interest thereon computed as provided in
subdivision two of this section. A school district which levies taxes on
behalf of a school district public library may charge back to such
public library the portion of such refund attributable to library
purposes. Such refund shall be made in accordance with the procedure set
forth in this section, provided, however, that application for such
refund shall be made, by the petitioner or other person paying such tax,
within three years after the entry of the final order ordering or
adjudging or determining such assessment to have been excessive, unequal
or unlawful, or that real property was misclassified. The time of the
pendency of any appeal in any such proceeding or from any such order
shall not be deemed part of such three years.
  * 2. Interest shall be paid on the amount of any refund made pursuant
to this section, computed from the date of payment of the tax or other
levy or portion thereof refunded; provided, however, that interest on
the amount of any such refund for the period after any final order
determining the assessment reviewed to be excessive, unequal or
unlawful, or determining that real property was misclassified,
notwithstanding that an appeal in the proceeding or from such order may
be pending, shall be paid only from the date that application for audit
and payment of such refund shall have been duly made to the appropriate
fiscal officer or body. Such rate of interest shall be the overpayment
rate set by the commissioner of taxation and finance pursuant to
subsection (j) of section six hundred ninety-seven of the tax law and
such interest rate shall not be greater than nine percent per annum.
Provided, the interest rate of the first calendar quarter set forth in
the first month of the calendar year shall be the annual interest rate,
and shall be the rate of interest prescribed by this subdivision. If, as
a result of an appeal, there shall be an increase in the amount to be
refunded, for the purposes of computing the interest thereon the
determination upon such appeal shall be deemed a determination only with
respect to such increase.
  * NB Applies to interest chargeable on or after April 1, 2003
  3. Application for the audit and payment of a tax or other levy paid
upon an assessment determined upon final order to be excessive, unequal
or unlawful, or paid upon an assessment of real property determined upon
final order to be misclassified, must be made to the proper fiscal
officer or body by the petitioner or other person paying such taxes
within three years after the entry of such order; provided, however,
that the time of the pendency of any appeal in any such proceeding or
from any such order shall not be deemed any part of such three years.
  4. Provision for the payment of all amounts charged to a city, town,
village, school district or special district pursuant to paragraphs (a),
(b) and (c) of subdivision one of this section, shall be included in the
next annual budget or estimate of such city, town, village, school
district or special district; provided, however, that in the event the
aggregate amount charged to any city, town, village, school district or
special district pursuant to paragraphs (a), (b) and (c) of subdivision
one of this section for any fiscal year exceeds twenty-five thousand
dollars or if such amount exceeds one per centum of the full valuation
thereof, such amount may be financed, in whole or in part, in the same
manner as a final judgment against such city, town, village, school
district or special district. Full valuation shall mean the valuation
obtained by dividing the assessed valuation, as shown on the last
completed assessment roll for which a state equalization rate has been
established, by such state equalization rate. If a town shall issue
obligations to finance the payment, in whole or in part, of the
aggregate amount so charged back to such town for any fiscal year, taxes
or other levies required for payment of the principal of an interest on
such obligations shall be imposed in the first instance upon the entire
town or such parts thereof, in the same proportion and manner, as the
taxes or other levies refunded and included in such aggregate amount
were imposed upon the entire town or such parts thereof.
  5. (a) If the parties have so agreed, a final order may provide that a
refund which is payable pursuant to this section shall be paid in
installments over a specified period, not to exceed five years. The
order may further provide, if the parties have so agreed, that interest
shall be paid on such installments, at the rate provided by this
section. Each such installment shall be audited, paid and charged back
in the manner provided by this section.
  (b) Notwithstanding any agreement of the parties to the contrary, in
no event shall an excessive, unlawful or unequal assessment be reduced
by more than is necessary to correct an excessive, unlawful or unequal
assessment, or reapportioned by more than is necessary to correct a
misclassification, so as to avoid paying a refund pursuant to this
section.

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