The definition of what is income for RPTL 467 was modified in the 2023-2024 Executive Budget. The New York State Assessors Association (NYSAA) hosted a webinar on June 21, 2023 to help assessors understand the changes; however, it was clear that there were still unanswered questions.
In an effort to provide some additional guidance, NYSAA partnered with the NYS Department of Taxation and Finance’s (DTF) legal team to get answers. NYSAA sent the most frequently asked questions from the webinar to DTF for clarification. DTF’s responses are below.
The information provided herein is for educational purposes only and are not legal conclusions or provided to take precedence over an assessor’s, jurisdiction’s, or other professional’s discretion. The statements are non-binding on the New York State Assessors Association, Inc. and if you have any questions on the applicability of any statements made herein, you should consult your attorney to determine the correct application moving forward.
NYSAA will offer a three-hour class this fall to discuss these changes in detail.
FAQs - DTF’s Legal Team Responses to NYSAA Questions:
1. Information not included on 1040 or Federal Schedule 1 should not be considered, for example: annual non-taxable earnings on IRA accounts, income from corporations/trusts the owner is involved in that are not flow through entities and are not included in FAGI, other sources of income, etc.?
A: Correct. The new law requires you to start with the applicant’s FAGI, make the adjustments authorized by subdivision three – i.e., for Social Security, IRAs, medical/Rx expenses, tax-exempt interest/dividends and losses, subject to local option where applicable – and that’s it. Other data elements are either included within FAGI or extraneous to the 467-income calculation and should not be taken into consideration.
2. Is DTF developing a worksheet for property owners that do NOT file a 1040?
A: Correct. DTF hopes to have the worksheet available by the end of August.
3. Will prior Opinions of Counsel still stand if the subject matter does not pertain to the income calculation?
A: DTF can’t make a blanket statement, it will depend on what the issue is, but generally speaking, yes, any prior Opinions of Counsel involving non-income aspects of 467 should not be affected by the new amendments.
4. If there is a negative FAGI, should 0 be a starting point for the calculation or should the assessor use the actual negative?
A: The new law requires you to start with the FAGI shown on the tax return. There’d be no basis for increasing a negative FAGI to zero.
5. Gambling winnings versus losses - are assessors able to net the two amounts for the purposes of eligibility for this exemption?
A: No. There’s no special treatment of gambling winnings or losses under the new law. You start with FAGI and make the adjustments authorized by subdivision three.
6. Does the example you provided to us correctly demonstrate how the loss limitations should be calculated?
A: Yes. (See below for a PDF of an example chart to calculate loss limitations.)
7. New Income calculation uses Federal tax-exempt interest not NYS, correct?
8. Are losses carried over from prior years (Form 1040, Schedule 1, line 8a) subject to the same loss limitations (max $3,000 per category, the aggregate amount of all losses not to exceed $15,000)?
A: Prior year loss carryovers are not taken into account when calculating income under the new law. The loss limitations (and addbacks) are determined based on the losses reported, by category, for the applicable income tax year.
It appears that the required documentation for a senior citizen who files a tax return will be a Federal Form 1040 and the corresponding Schedule 1 from the applicable income tax year.
A senior citizen who does not file a tax return will be required to submit their 1099(s) and/or DTF’s non-filer’s worksheet based on the same TSD schedule.
NYSAA compiled all of the questions posed during the June 21 webinar, and experienced assessors provided answers. See the PDF below for the questions and answers as presented in the webinar chat.
DTF created a web page about the changes for assessors to use as a resource: