State Audits Finds $5.8M In Wrongful Tax Credits

New York’s property tax freeze, property tax relief and STAR tax credits are still rife with errors, according to a recent audit of the programs by state Comptroller Thomas DiNapoli’s office.

DiNapoli’s office reviewed property tax freeze, property tax relief and STAR tax credits processed through the state Taxation and Finance Department from July 1, 2016, through June 30, 2017, and found 15,313 questionable or inappropriate credits totaling $5,779,567. The issues were found in roughly 1 percent of total payments issued. Issues with the questionable tax credits include calculation errors, duplicate payments, deceased taxpayers or ineligible home owners or properties. While the Taxation and Finance Department processes and approves the requests, the comptroller’s audit noted that some of the issues are likely outside the Taxation and Finance department’s control.

“We recognize the department’s own efforts to identify and stop inappropriate credits, and attribute some of the inappropriate credits approved by the department to data received in inconsistent formats from various assessors,” the audit states. “Additionally, assessment roles may not be updated to reflect changes in ownership, causing the department to process credits payable to prior owners.”

The audit suggested the Taxation and Finance Department create better controls, or establish controls, to make sure credits sent for approval are appropriate and continue to work with local taxing jurisdictions to make improvements to collect accurate and complete information.

One of the recommendations in the 2008 Lundine Commission report was to centralize things like assessing at the county level; at the time of the report’s creation, there were 1,128 individual assessing units, 981 city and town assessing units, two county assessing units and 145 villages assessing property for village tax purposes. There were 1,376 assessor positions, including 150 elected three-person assessing boards.

While the Lundine Report is a decade old, the state Taxation and Finance Department’s response to the Comptroller’s Office audit indicates fragmented local assessing operations are indeed part of the problem with inappropriate tax credits being paid by state government.

“As the draft report recognizes, the property tax-related credit programs administered by the department are significantly dependent on property tax data from more than 3,775 local jurisdictions, including counties, school districts, cities, towns, villages, library districts, fire districts and other special districts,” Edward Chaszczeski wrote in the Taxation and Finance Department’s response to the audit. “We continue to work closely with municipal assessors and county property tax directors to improve the administration of property tax credits on behalf of property owners statewide.”