Comptroller’s audit finds that the DOF misclassified for tax purposes at least twelve Class 1 properties on Staten Island. On February 24, 2017, the Office of the City Comptroller Scott Stringer released a report of an audit of Department of Finance property classifications on Staten Island. The audit sought to evaluate whether payments to Samaritan and the payment rates were reasonable, appropriate, and adequately supported, and whether Samaritan was complying with its contract with DHS. Additionally, the audit sought to determine whether DHS adequately monitored Samaritan to ensure that all payments were made in compliance with the contract.The DOF, among other charges, is responsible for classifying every property in the City for tax purposes. The City has divided all properties into four tax classes. Class 1 properties are residential properties with three of less units and mixed-use properties. Class 2 properties are all other primarily residential properties containing more than three units. Class 3 properties include real estate of utility corporations and special franchises. Class 4 properties are all other properties, primarily commercial lots.
The DOF is responsible for producing a fair, accurate, and legal tax assessment roll each year. To accomplish this, the DOF employs enough assessors to physically visit every property once every three years. For Fiscal Year 2016, the DOF collected 23.18 billion in property taxes for 1,103,323 taxable properties in the City. There are 708,577 Class 1 properties in New York City. The Comptroller’s audit covered properties in Staten Island that the DOF classified as mixed-use properties in Tax Class 1 on its Final Assessment Roll as of May 2016.
In the final report, the Comptroller’s Office found that of the 943 mixed-use properties classified as Class 1 in Staten Island, 28 properties appeared to be misclassified. As a result of the Comptroller’s findings, the DOF reassessed the properties and confirmed that 12 of the 28 properties should be reclassified. The DOF determined, however, that 16 of the properties were properly classified. The Comptroller’s Office calculated that the reclassification of the 12 properties would result in an additional $86,599 in taxes over the next five years.
The Comptroller’s Office made three recommendations. First, it recommended that the DOF ensure that property tax classification changes are implemented by the next tax year. Second, DOF should determine the reason agency inspectors did not change the classifications revealed by the audit and to enhance inspector training to address any issues identified. Third, it recommended that the DOF consider enhancing its oversight and quality assurance functions to ensure proper classification of properties.
To read the full audit report, click here.
Audit Report on the Tax Classification of Real Property in the Borough of Staten Island by the New York City Department of Finance. SR17-084A, NYC Comptroller Scott Stringer (Feb. 24, 2017).
By: Jonathon Sizemore (Jonathon is the CityLaw Fellow and a New York Law School Graduate, Class of 2016).