A July 2016 audit uncovered thousands of properties belonging to corporate entities and deceased homeowners that were wrongly granted property tax exemptions

Comptroller releases new follow-up review that shows corrective action will result in collection of millions in previously uncollected revenue

(New York, NY) – After a July 2016 audit of the Department of Finance (DOF) revealed the agency improperly granted nearly $60 million in property exemptions between FY 2012 and FY 2017 – with much of it going to corporate entities and deceased homeowners – a new follow-up review released today by Comptroller Scott M. Stringer found the department has taken steps toward corrective action. Those steps, following Comptroller Stringer’s recommendations, will result in the City’s receiving an additional $9 million in revenue in the current fiscal year.

DOF is responsible for implementing and monitoring tax benefits granted under the Senior Citizen Homeowners’ Exemption – or SCHE – which provides a partial property tax exemption for those 65 or older whose primary residence is a one, two, or three family home, a condominium, or a cooperative apartment in New York City. However, a July 2016 Comptroller Stringer audit revealed that 3,890 properties improperly received a SCHE tax break between FY 2012 and FY 2017, resulting in a loss of close to $50 million in City property tax revenue. The prior audit also found 3,317 properties of deceased homeowners and corporate-owned properties had been improperly credited with an Enhanced School Tax Relief – or STAR – exemption worth more than $10 million. That initial audit recommended that the Department of Finance take steps to recoup lost revenue as a result of its wrongful application of those property exemptions.

Comptroller Stringer released a follow-up review of FY 2018 exemptions today, which found that DOF has taken corrective action since the original audit, removed the SCHE from over 2,000 properties where the homeowner had died, and also removed the Enhanced STAR exemption from more than 1,500 properties that did not qualify. As a result, the City will realize a gain of $9,201,392 in additional revenue for FY 2018 alone.

“We do this work to make government function better for New Yorkers, and to ensure that dollars that should go to our kids, our infrastructure, and services for those who need them most aren’t wasted. When government makes mistakes, New Yorkers expect agencies to respond – not with excuses, but with action. That’s exactly what happened here. While it’s extraordinary that ineligible corporations and individuals were receiving a tax break designed specifically for our seniors, that corrective steps have been taken is laudable. The Department of Finance deserves recognition for doing the right thing,” said New York City Comptroller Scott M. Stringer. “The Department reviewed our initial audit, recognized their errors, and took responsible steps to fix the problem. That’s why we do audits: to induce corrective action. Now, millions of dollars of revenue will be collected. That’s a win for taxpayers and a step forward for accountability.”

Comptroller Stringer’s follow-up review specifically found that for FY 2018:

  • DOF has removed the SCHE from 2,057 properties where the homeowner had died, 67 properties that had corporate ownership, and 273 properties that contained four or more units;
  • DOF prorated the SCHE for an additional 262 properties that contained four or more units;
  • The Enhanced STAR exemption was removed from 1,523 properties; and
  • As a result, the City will realize a gain of $9,201,392 in additional revenue for FY 2018.

During the follow-up review, DOF indicated to the Comptroller’s Office that the agency will remove or prorate the SCHE from an additional 576 ineligible properties and remove the Enhanced STAR exemption for 403 of those properties.  Removing or prorating the SCHE and Enhanced STAR exemptions for these properties will result in a gain of $1,292,820 in additional revenue.

To read the July 2016 audit, click here.

To read the new follow-up review, click here.

###