§ 996. Contracts with banks for the collection of taxes and certain
special assessments. 1. Notwithstanding any general, special or local
law to the contrary, a municipal corporation having the responsibility
for collection of taxes or special assessments, or both, may enter into
agreements with a bank, or with two or more banks, for the collection of
taxes and special assessments which are collected together with such
taxes. For purposes of this section, the term "bank" shall have the same
meaning as in paragraph d of subdivision one of section ten of the
general municipal law. The term "special assessments" shall be limited
to those special assessments collected together with taxes.

2. A bank that has entered into an agreement pursuant to this section
shall: (a) accept payments of taxes or special assessments, or both, for
a period beginning on the day on which the warrant for the collection of
taxes is delivered to the collecting officer, and ending on the day on
which such warrant expires;

(b) decline any partial payments of a tax bill, or special assessment,
or both, except where the municipal corporation is one which is
authorized to accept partial payments of taxes or special assessments or
both;

(c) collect the appropriate amount of interest on any taxes or special
assessments, or both, paid after the end of the interest-free collection
period;

(d) furnish receipts to each person paying a tax or special
assessment, or both, except that when a tax or special assessment has
been paid by a mortgage investing institution pursuant to the provisions
of title three-A of this article, receipts shall be delivered or mailed
to such mortgage investing institution, subject to the provisions of
such title;

(e) deposit all taxes and special assessments and interest collected,
immediately upon receipt, in the account or accounts designated by the
municipal corporation in such bank, or in any other bank designated by
the municipal corporation;

(f) continually maintain records of deposit showing the dates and
amounts of all taxes and special assessments collected, and the
taxpayers from whom such taxes and special assessments were collected;

(g) transmit to the collecting officer a daily report of the taxes and
special assessments collected, which report shall be accompanied by a
statement showing the deposits credited to the account of the municipal
corporation; and

(h) perform such other duties, and maintain such other records, as the
contract may provide.

3. (a) A bank which has entered into an agreement with a municipal
corporation pursuant to this section shall be liable to the municipal
corporation for all loss or damage which may result from any failure of
its officers or agents to discharge their duties, or from any improper
or incorrect discharge of those duties. The bank shall save the
municipal corporation free and harmless from any and all loss occasioned
by or incurred in the performance of services under a contract pursuant
to this section.

(b) A bank which has entered into an agreement with a municipal
corporation pursuant to this section, and which receives moneys from a
taxpayer for payment of real property taxes or special assessments, or
both, shall be liable to such taxpayer, upon failure to properly credit
such payment, for the amount of the taxes or special assessments, or
both, plus interest and penalties imposed thereon.

4. Moneys deposited with a bank pursuant to this section shall be
secured in the manner provided by section ten of the general municipal
law.

5. The statutory powers and duties of a tax collecting officer,
including the authority to receive taxes, shall not be affected by the
existence of a contract executed pursuant to this section, except that
the collecting officer shall: (a) notify the bank upon receiving the
warrant for the collection of taxes or special assessments, or both;

(b) include in the appropriate notices the fact that taxes or special
assessments, or both, may be paid to the bank;

(c) notify the bank of the date on which the interest-free collection
period expires;

(d) make the appropriate entries in the official records, upon
receiving each daily report of taxes and special assessments collected
by the bank; and

(e) make the accounting and return, as provided by law, upon receipt
from the bank of the final daily report of taxes and special assessments
collected.

6. A contract executed pursuant to this section shall be subject to
the requirements of article five-A of the general municipal law, and
shall be for a term not to exceed five years, except that it shall be
subject to cancellation by the municipal corporation at any time upon
thirty days notice to the bank.