July 19, 2016
By Neal Tepel
New York, NY – New York City Comptroller Scott M. Stringer has identified nearly $75 million in lost tax revenue do to sloppy book-keeping by city officials. Between FY 2011 and FY 2017, the Department of Finance improperly credited a tax exemption for dead New Yorkers.
The administration of this program intended for seniors had been poorly managed for years. In addition, the city never followed state tax law which requires that any senior homeowner who has been granted this exemption re-apply for the credit every two years.
“Our audit uncovered that the Department of Finance has been giving away tens of millions in tax exemptions meant for senior citizens to corporations and deceased New Yorkers,” Comptroller Stringer said. “This lost revenue could have gone toward building the affordable housing we desperately need, or increasing resources for our school children. Programs like the Senior Citizen Homeowners’ Exemption help older New Yorkers to stay in their homes and remain in their communities. The City must ensure these tax breaks only go to those who deserve them.”
The audit examined whether the Department of Finance (DOF) ensured that property owners receiving the Senior Citizen Homeowners’ Exemption (SCHE) as of July 1, 2015, met the eligibility requirements of the program. SCHE provides a partial property tax exemption for any senior citizen who owns a one, two, or three-family house, condominium, or co-op apartment in New York City. To be eligible, an applicant must be 65 or older, have a combined household income below $37,400, and occupy the property as their primary residence. SCHE can reduce the assessed value of a property by between 5% and 50%, based on the income of the homeowner.
In New York State, an individual who qualifies for the SCHE automatically qualifies for the Enhanced School Tax Relief (STAR) Exemption, which is also available to the same population but with a higher income cap, $79,050 a year. The Enhanced STAR Program exempts the first $62,200 of the full value of the home from school taxes.
When recipients of the SCHE pass away or sell their homes, their tax exemptions do not transfer to the next owners. To ensure that only the proper individual receives the tax credit, state law requires all recipients of the exemption to re-apply every two years. The Comptroller’s audit concluded that the agency has failed to request those re-applications for the last ten years. As a result, thousands of unqualified individuals and corporations continued to receive the tax break, costing the City millions in tax revenue.
From FY 2011 to FY 2017, the Department of Finance improperly credited $59.2 million in tax breaks to 3,890 ineligible properties.These same properties were also incorrectly credited with an Enhanced STAR exemption after the homeowner’s death, which added up to another $10,460,540 in lost revenue.