The Meter is Running
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Be aware of the laws regarding a super’s apartment and his compensation.
AUTHORStuart Halper, Impact Real Estate Management
PAGE #p. 45
The state government is auditing co-ops - are your books in order?
The challenge that we face is essentially being prepared and in compliance with New York State labor laws – specifically, laws pertaining to buildings that employ people who aren’t on the payroll. Buildings cannot disguise regular employees as contractors on 1099 forms. Over the last six months, the state government has been auditing the books of co-ops and condos. That’s the first time they’ve done that in many years. The state also knows that many co-ops and condos disguise regular employees as independent contractors or have not been listing the resident super’s apartment as part of their compensation. For tax purposes, the value of the apartment should be considered income. Buildings are now subject to fines and penalties if they don’t do this and then pay the appropriate taxes, social security, unemployment insurance, and disability and compensation.
One of the things that we’ve always required is making sure that our clients have the proper paperwork in place. The end result for most of our clients has been no increases and no penalties, because we have been ahead of the curve. Even before it actually hit, we were out there warning our clients that we have to be 100 percent in compliance. If the government finds that you’ve disregarded the law, you’re looking at fines ranging from $5,000 to $10,000.
Boards, be wary. You want to be in full compliance. You don’t want to subject yourself to fines and violations.