Audit Report On The New York City Department Of Finance’s Administration of The Disabled Homeowners’ Exemption Program

Audit Report On The New York City Department Of Finance’s Administration of The Disabled Homeowners’ Exemption Program

EXECUTIVE SUMMARY

This audit was conducted to determine whether DOF ensures that New York State Disabled Homeowners’ Exemption (DHE) recipients meet the eligibility requirements of the program.  The DHE program is governed by the New York State Real Property Tax Law (RPTL) and administered by DOF. The DHE program provides property tax exemptions to qualified disabled homeowners. As of June 30, 2014, there were 5,308 homeowners receiving the DHE.

Audit Findings and Conclusion

DOF does not verify that homeowners who were initially granted a DHE remain eligible for the DHE program as required by law.  The 51 DHE case files sampled in connection with this audit showed that none of those homeowners had submitted annual applications certifying that they were still qualified for the DHE, notwithstanding a statutory requirement that they do so. DOF also did not maintain sufficient documentation to establish that every homeowner currently granted a DHE was ever eligible for the DHE.  Additionally, we found at least three of the sampled property owners were deceased and that there was no evidence in the files to indicate that the surviving homeowners were entitled to the DHE. The lack of homeowners’ recertification information, as well as DOF’s failure to enforce the statutory annual filing requirement and to take action against those non-filers, may have resulted in improper exemptions being granted by DOF.

Based on our analysis of the property tax bills issued for Fiscal Year 2014 (July 1, 2013 through June 30, 2014), we calculated that the 51 homeowners sampled received exemptions resulting in actual tax savings to these homeowners of just over $100,000, or an average homeowner tax savings of $2,078.

During the course of the audit, we informed DOF officials of our concerns regarding the possibility that three disabled homeowners may have died and the surviving homeowners may be improperly receiving the DHE benefit.  Subsequent to the March 12, 2015, exit conference, DOF provided documentation that the DHE benefits were removed from the three properties retroactively to the date of death of the disabled homeowner.

Audit Recommendations

• DOF should send the annual notice of renewal required by the RPTL to all homeowners who have been granted a DHE with a reminder that they must file annually to be entitled to an exemption.
• DOF should not grant a DHE or allow anyone to take a DHE who does not annually file an application for an exemption and meet all of the requirements for the exemption.
• DOF should maintain complete case files by scanning and retaining new applications, renewal applications and supporting documentation.
• DOF should revise the exemption applications to inform the applicants that they are required to file for a DHE for each year that they claim it.

Agency Response

DOF officials agreed with the audit’s recommendation and stated that it “is already in the process of undertaking the steps recommended to ensure renewals are being completed and case files are being maintained.”  DOF “will continue to diligently review applications and supporting documents to ensure applicant eligibility.”