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City Failing to Collect Millions in Property Taxes

New York City

Missed Taxes
Oct. 4, 2019

The city is failing to collect millions in property taxes and transfer fees because of lax oversight by the Department of Finance.

Everyone in New York complains about property taxes – except those who, through the city’s negligence, don’t pay them. 

A new analysis by Comptroller Scott Stringer asserts that, in 2016 and 2017, the Department of Finance (DOF) failed to collect at least $620,000 it was due from levies on property sales and more than $2 million in annual assessments on houses, apartments and commercial properties, Crain’s reports. At fault, his office argued, is insufficient oversight on the part of DOF, including failure to review all documents related to a real estate transactions, and failure to re-impose yearly duties when a government or nonprofit entity sells or leases a space to a private party. 

Stringer noted that the former, the Real Property Transfer Tax, helps fund the Metropolitan Transportation Authority by dedicating revenues from high-dollar commercial sales to the transit system. The latter, the Real Estate Tax, underwrites much of the city's annual budget. 

"DOF’s failure to institute sufficient controls over its RPTT and RET operations significantly increases the risk of inadequate collection and potential loss of city revenue and of funds due to the MTA," the report claims. "DOF has not established adequate written policies and procedures for managing its receipt and review of RPTT returns and did not provide adequate training to and oversight of its examination staff.” 

The analysis also alludes to "weaknesses" in the agency's process for revoking tax exemptions. Stringer's team identified 26 cases in which the department did not properly reinstate the full fiscal burden upon a property despite it passing from a tax-exempt use to a non-tax-exempt one. This resulted in a loss of $2,095,701 for the city. 

The report recommends that city enhance its training and review procedures, upgrade computer software to check for missing materials and miscalculated tax assessments, and to automatically reimpose the Real Estate Tax any time a property changes hands. 

Stringer has made his own ambitions to succeed Mayor Bill de Blasio in 2021 well known, and has stepped up investigations into his administration in recent months.

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