NYC Grand Jury suggests sweeping reforms to Property Tax System

Following is a list of the recommendations made by a NYC Grand jury recently in light of the the DA’s findings regarding tax payer’s under-reporting of income.

1. Set an Earlier Deadline for Initial Tax-Related Filings

The current deadline in September does not allow the Department of Finance adequate time to evaluate information in the filings, much less to detect fraud. The Grand Jury recommends requiring an earlier annual filing deadline no later than the first of June. The City Council recently introduced legislation, at the request of Mayor Bloomberg, that would implement this recommendation.

2. Require Notarized RPIE Filings

Property owners should be required to make a sworn statement about the validity of the representations made in RPIE filings, which would also serve to expose those who lie on the forms to prosecution for perjury, a felony offense. The City Council recently introduced legislation, at the request of Mayor Bloomberg, that would implement this recommendation.

3. Subject False RPIE Filers to Civil Administrative Sanctions

While the Department of Finance can impose civil sanctions on owners who fail to file RPIEs, it does not have comparable authority to sanction those who file false RPIE’s unless it determines that the misrepresentations are so substantial that they render the RPIE tantamount to a non-filing. This is an anomaly, and fairness dictates that the filers of false information should be subject to the same sanctions as non-filers.

4. Subject False Tax Protest Filers to Civil Sanctions

The Tax Commission is authorized to grant a large amount of tax relief to property owners based on its filings. But if those filings are intentionally inaccurate or false, the Commission currently has no power to sanction owners. The Grand Jury recommends authorizing the Tax Commission to raise an assessment value if it discovers that, as part of the protest process, the property was undervalued by the Department of Finance due to inaccurate or incomplete information, and to impose civil financial penalties.

5. Dedicate Technological Resources to Detect Property Tax Fraud

Useful data for real property tax assessors already exists on a variety of City agency websites, such as those maintained by the NYC Department of Buildings, the Landmarks Preservation Commission, the NYC Department of Consumer Affairs, and the NYC Department of Housing Preservation and Development. Although this information is public, it is difficult to access and not easily searchable. A better system could make an enormous difference in the detection of false filings. The Grand Jury recommends having the Mayor’s Office of Policy and Strategic Planning devise a system for better sharing existing city records with the Department of Finance and Tax Commission.

6. Mandate Electronic Filings with the Tax Commission

Submissions to the Tax Commission are still in paper form and must be digitized so that they can be better integrated with other City agencies and searched for investigative leads.

7. Amend the City Criminal Tax Fraud Statutes

Although certain crimes in the Administrative Code pertain to the evasion of taxes, no offenses apply to real property tax, due to an apparent legislative oversight. The Grand Jury recommends that the State Legislature create felony-level offenses in the Administrative Code to close this loophole.

Property Tax Evasion in City Is Widespread, Report Suggests

From the August 1, 2012 NYTimes…

This article summarizes some of the findings of DA Cy Vance regarding property owners neglecting to report income from different sources. For example, one owner did not report billboard income. DA is calling for reforms to the reporting system.