Catt. Co. Dinged For Improper Agricultural Exemption Calculations

Cattaraugus County is among the eight counties that saw improperly calculated agricultural exemptions — and shortchanged tax collections — in 2014, 2015 and 2016.

The news came from an audit by Thomas DiNapoli, state comptroller, of the state’s Agricultural Assessment Program. Auditors wanted to make sure the state Department of Taxation and Finance’s Office of Real Property Tax Services was properly calculating and communicating the annual per-acre Agricultural Assessment Values that local assessors and boards of assessors use to compute agricultural property assessments and the resulting exemptions.

The New York Agricultural Districts Law was enacted in 1971 to protect and promote the availability of land for farming purposes. The law allows reduced property tax bills for land in agricultural production by limiting the property tax assessment of the land to its prescribed peracre Agricultural Assessment Value. The state calculates and certifies the per-acre agricultural assessment value each year for soil groups, aquaculture, and farm woodland. Local assessors determine whether land is eligible for the Agricultural Assessment Program by evaluating the property owner’s application, including consideration of whether the land satisfies gross sales and acreage eligibility requirements. Assessors are required to use the state’s Office of Real Property Tax Services values to determine the agricultural assessment and corresponding exemption amounts for enrolled properties.

DiNapoli’s auditors identified an error the state office’s calculation in 2006 that caused subsequent years’ agricultural assessment values to be incorrect, including those certified and communicated to local assessors during the audit period. Assessors’ use of the incorrect agricultural assessment values resulted in about $10.4 million in excess agricultural exemptions granted to property owners from 2014 through 2016 for 10,416 properties in the eight counties analyzed. Because of the excess exemptions, an estimated $349,069 in real property taxes was not collected from property owners.

Nonie Mannion, state taxation and finance commissioner, wrote in her department’s response to the audit that statutory changes enacted in 2007 made correcting the 2006 error moot by saying that in no event shall the change for the base agricultural assessment value for any given year exceed 10 percent of the previous year’s value.

“While we disagree with the draft audit report’s premise that the 2006 error is still relevant to the 2014-16 audit period, it’s important to note that your own figures for the eight counties that you studied during that audit period show the estimated tax savings to program participants that you attribute to the error was only about $11 per parcel per year,” Mannion wrote. “Likewise, the estimated impact of those savings that were borne by other taxpayers (those not in the Agricultural Assessment Program) in those same eight counties was only about 11 cents per parcel per year. By directing such a disproportionate amount of attention to such a minor error, we respectfully submit that the draft audit report may likely distort the true fiscal impact of this mistake.”