County Not Entitled to Dismissal of Suit Seeking Refund of Taxes Declared Wrongly Collected by the Court of Appeals

The Second Department determined that the plaintiffs’ action seeking the refund of taxes wrongfully collected on “mass property” was properly allowed to proceed.  “Mass property” includes things like power lines, poles, transformers, etc. The defendants had been collecting ad valorem taxes on the mass property for garbage collection.  Ultimately the Court of Appeals held that such taxes could not be collected on mass property, which did not produce garbage.  The defendants argued that they were not obligated to refund the taxes paid and moved to dismiss on that ground.  In affirming the denial of that motion, the Second Department explained that the invalidation of the ad valorem tax did not meet the criteria for when a court holding should be given only prospective application in the context of taxation:

…[W]here a municipality has reasonably relied upon a widespread and longstanding practice … or a statute is later invalidated …, and where applying the invalidation retroactively would call into question “a settled assessment roll or property rights based thereon,” a court may exercise its discretion by giving its holding only prospective application … . Here, the County defendants’ submissions have not demonstrated that awarding the plaintiffs the refunds they seek would call into question settled assessment rolls or property rights based thereon. Keyspan Generation LLC v Nassau County, 2014 NY Slip Op 01721, 2nd Dept 3-19-14