A New York State Supreme Court Grand Jury has issued a report calling for reforms that would prevent property owners from abusing city property tax laws.
Current laws, regulations, and systems are not adequate to prevent and deter costly false tax liability filings, which occur “with unacceptable frequency,” the Grand Jury found.
The reforms would maximize tax receipts that are lawfully due to the city, protecting the integrity of the system, New York County District Attorney Cyrus R. Vance, Jr. said in a statement.
“As the city’s single largest revenue source, the importance of real property tax to the financial well-being of New York cannot be overstated,” Vance said. “However, some unscrupulous individuals and entities routinely try to cheat the City out of this valuable revenue stream by filing false information with city agencies. We have to do better if we want to deter these abuses.”
The Grand Jury report stems from investigations by the District Attorney’s Money Laundering and Tax Crimes Unit into false filings submitted to the NYC Department of Finance and the NYC Tax Commission.
As part of the current real estate tax assessment process, owners of properties valued above $40,000 are required to submit Real Property Income and Expense (RPIE) Statements with the NYC Department of Finance.
In one study, 60 percent of property owners surveyed failed to report income from signs posted on their properties, according to the report.
But only “minimal consequences” currently exist for property owners who file false information, and authorities lack the power to impose adequate civil and administrative sanctions to deter these false filings, the report states.
The Grand Jury report makes several recommendations that call for a strengthening of prosecutorial tools used to address the criminal conduct and the dedication of technological resources to detect fraud and false information.
The current deadline to file RPIE forms is September 4, 2012, but the Grand Jury recommends an earlier annual filing deadline, no later than the first of June, giving DOF more time to evaluate tax filings.
“The Grand Jury’s findings are consistent with the reforms Finance has been working towards, including a bill that was recently introduced at the City Council to move the RPIE filing deadline to June,” said DOF Commissioner David M. Frankel. “We will work with the state and city legislatures to ensure appropriate reforms are enacted and that property owners face real penalties for filing fraudulent documents with the city.
Among other recommendations, property owners would be required to make a sworn statement about the validity of RPIE filings, exposing “those who lie” to prosecution for perjury, a felony; and the Tax Commission would have authorization to raise assessment value and impose financial penalties if it discovers that a property was undervalued due to inaccurate or incomplete information.
The Grand Jury also recommends the implementation of comprehensive technological systems to detect false filings, through which the Mayor’s Office of Policy and Strategic Planning would be able to more easily share existing city records with DOF and the Tax Commission.
“Every taxpayer in the City of New York has an interest in making sure that property tax filings are accurate and complete so that fair assessments can be made,” NYC Tax Commission President Glenn Newman said. “Everyone is hurt when false filings lead to inaccurate assessments.”