By Samantha J. Golkin and Benjamin A.J. Golkin, Law Offices of Jeffrey Golkin Partners
Owners of income producing property with an actual assessed valuation greater than $40,000 in New York City are reminded that mandatory online filings of income and expense statements with the Department of Finance are due on or before June 1.
The mandatory online electronic filings with the Department of Finance, commonly referred to as “RPIE” filings, require property owners to provide real property income and expense information and other relevant facts regarding occupancy and the operation of their property each year.
This year, property owners will be required to provide income and expenses for 2016 and to report any changes relative to occupancy in the past year.
The filing covers the calendar year reporting period from January 1, 2016 to December 31, 2016. For property owners on a fiscal year, the filing covers the last complete fiscal year as of May 1, 2017.
Failure to file or timely file an RPIE will result in monetary penalties assessed against the property in an amount that can go up to as much as three percent of the property’s actual assessed valuation.
If you are required to file a Claim of Exclusion, and one is not filed on or before June 1, 2017, there is a penalty of $100 dollars. Non-filing property owners will also be denied the right of tax review before the Tax Commission, i.e., a hearing to review the correctness of the property assessment.
Non-compliance with RPIE-2016 requirements, i.e., the filing due on or before June 1, 2017, will result in denial of a Tax Commission hearing for tax year 2018/19.
For property owners that challenge their assessments, it is critical that there is consistency between the information provided to the Department of Finance online and the information filed with the Tax Commission.
Applications for Correction of Assessed Valuation for income producing properties are filed with the Tax Commission on or before March 1 each year with income and expense information reported on form TC 201.
Since RPIE filings with the Department of Finance are not required to be filed until June 1, income producing property owners should make sure that the information filed later online is consistent with the information previously filed with the Tax Commission, particularly with regard to income and expense information as well as the property’s partial or full owner-occupied status.
Facts, owner occupancy and vacancies reported on the RPIE-2016 due on or before June 1, 2017 should be based upon the facts and circumstances at the property as of the taxable status date of January 5, 2017, even though the income being reported is for 2016.
It is not unusual for year end figures or audits not to be finalized or concluded prior to March 1, so it is possible that there may be inconsistencies between the RPIE filing in June and the income and expense statements previously filed in March with the Tax Commission as part of the real estate tax appeal.
Property owners must be prepared to explain or reconcile any such inconsistencies. It is recommended that every effort be made to file consistent statements or submit appropriate amendments on form TC 159 with the Tax Commission to reconcile any inconsistencies.
Property owners are reminded that willful misstatements of facts on an RPIE form is a crime punishable by law. Estimates, approximations and rounding of income and/or expenses must be avoided.
Property owners should also be prepared to support and substantiate unusual circumstances in operation of their property such as material or continued operating losses, material decreases in income, substantial or continuing vacancies, material increases or decreases in operating expenses, rents that are substantially below market, stabilized residential rents that are substantially above or below stabilized levels at comparable properties, substantial increases in vacancies, excessive wages and payroll for the type of property, and repairs and maintenance exceeding 15% of gross income.
Although most income producing properties are required to file an RPIE (including rental apartment buildings, commercial properties with tenants, residential cooperatives with 2,500 square feet of commercial space (not including garage space), commercial condominiums, sponsors or holders of unsold residential condominium units where 10 percent or more of the units remain unsold, hotels, motels, parking garages, parking lots, theaters, adult care/nursing facilities, gas stations, and storage facilities), there are many properties that are not required to file an RPIE or a Claim of Exclusion.
Properties that are not required to file an RPIE or Claim of Exclusion include properties with an actual assessed valuation of $40,000 or less, residential properties with ten or fewer dwelling units, Tax Class 1 and Tax Class 2 properties with six or fewer dwelling units and no more than one commercial unit, and individual residential condominium unit owners.
There are many properties that are required to file a Claim of Exclusion. A Claim of Exclusion is a limited online RPIE filing which requires the property owner to check off one of the categories listed online as the basis for a Claim of Exclusion.
It is up to each property owner to determine whether income and expense information is required.
A property owner makes a Claim of Exclusion by completing Section D of the RPIE. Properties that are generally exempt from filing an RPIE and are eligible to file a Claim of Exclusion include residential cooperatives with no more than 2,500 square feet of commercial space (not including garage space), properties rented exclusively to persons or entities related to the owner (spouse, parents, children, siblings, parents-in-law), 100 percent owner controlled business entities, business entities under common control, entirely owner occupied properties (with some exceptions), vacant or uninhabitable properties with no existing leases, and new property owners without knowledge of the income and expenses for the entire year for which an RPIE is required.
There is a wealth of information online at nyc.gov/rpie regarding the annual RPIE filing requirements including instructions and worksheets as well as worksheets for various types of specialty properties such as self-storage facilities, hotels, adult care/nursing home facilities, gas stations, car wash and oil change facilities, theaters and concert halls.
Property owners are urged to satisfy the annual RPIE compliance requirements by putting procedures in place to assure accurate and consistent RPIE reporting.