Audit determined the Department of Finance improperly gave abatements to condos and co-ops owned by corporations over a four-year period. On January 28, 2016 the Office of the City Comptroller Scott Stringer released a report of an audit conducted of the Department of Finance. In the final report, the Comptroller’s Office found the Department of Finance wrongly gave out over $10 million worth of property tax abatements to corporate-owned condominums, co-ops, indoor parking spaces, and cabanas between fiscal years 2013 and 2016.
The abatement is intended for individual homeowners of condos and co-ops to provide them tax relief through a partial reduction. Under the terms of the abatement the receiving owner must use it as their primary residence and could not be a corporation, however the audit found 1,085 condos owned by corporate entities that received the abatement over the four-year period. According to the audit report, the error occurred because the condos were originally owned by individuals and then sold to corporate ownership but the Department of Finance failed to recognize the change in its records. The remaining erroneous abatements, according to the report, were given out to corporate-owned properties from the start after a failure by Finance to confirm they were individually-owned.
The report called for Finance to immediately begin work to recover the $10,018,348 in lost tax revenue. In a statement released with the report, Comptroller Stringer said “This money could have been used to fund our schools, put more police on our streets and help house our homeless but instead they lined the pockets of LLCs and corporations. The Department of Finance needs to significantly step up its game and collect all the taxes the City is owed.” The report also calls on Finance to upgrade internal systems to automatically reject abatement applications from ineligible corporate property owners, require eligibility verification by individual Finance staff members, and to enforce state law requiring condo boards to submit annual reports on which units in their buildings have been sold and whether the new owner is a corporation.
Audit Report on the New York City Department of Finance’s Administration of the Cooperative Condominium Tax Abatement Program. SR16-055A, NYC Comptroller Scott Stringer (Jan. 28, 2016).
By: Michael Twomey (Michael is a CityLaw Fellow and a New York Law School Graduate, Class of 2014)