Audit Report on the Tax Classification of Real Property in the Borough of Brooklyn by the Department of Finance

AUDIT REPORT IN BRIEF

This audit determined whether the Department of Finance has adequate procedures in place to ensure that properties in the borough of Brooklyn that are listed as Class 1 on the assessment rolls are correctly classified. The scope of this audit covered tax assessments for Fiscal Year 2004.

The audit found that Finance does not have adequate procedures in place to ensure that properties in the borough of Brooklyn that are listed as Class 1 on the assessment rolls are correctly classified. Finance routinely inspects Class 2, 3, and 4 properties to ensure that they are correctly classified on the assessment rolls, but it does not conduct such inspections of Class 1 properties. Instead, Finance inspects Class 1 properties only when it is informed by the Department of Buildings that the properties are being altered or renovated.

We identified 135 properties listed as Class 1 on the assessment rolls that appeared to be misclassified. Using Finance guidelines, we determined that of these properties, 134 should have been classified as Class 4 and one should have been classified as Class 2. Had these properties been correctly classified, we calculated that Finance would have billed the owners an additional $904,667 in property taxes for Fiscal Year 2004.