By Holly Dutton
Mayor De Blasio’s administration is cracking down on a decades-old commercial tax on billboards that advertisers have been skipping out on.
The six percent commercial tax on office leases brings in $700 million a year but, in recent years, the department of finance has been lax in penalizing building owners for failing to collect the tax.
In August 2013, an audit by the state and city found that 82 percent of the 871 buildings with billboards did not report any income from the ad space between 2009 and 2010, an income that was estimated at $20 million, according to state and city controllers Thomas DiNapoli and John Liu.
The uncollected funds were discovered following an audit by the Bloomberg administration of dozens of firms.
Auditors examined whether billboard income was being accurately reported on Real Property Income Expense Statements (RPIEs) filed with the Finance Department for a two year period. RPIEs are due each year on Sept. 1 and are used to develop the property tax assessments for the city tax year that begins the following July 1. The audit covered RPIEs for the 2010-11 and 2011-12 tax years.
Two firms have negotiated settlements of nearly $1 million total, and more than 20 other firms are being audited and expected to collect $18 million, according to the Department of Finance.
“An audit that began in 2013 found that many companies doing business in Manhattan had long failed to pay taxes generated from billboards,” the Department of Finance said in a statement.
“The Department of Finance is currently meeting with taxpayers and their representatives and taking a fair approach to settle payments going back six years, even though some billboards have been in operation for decades.
“We are working with our business partners to resolve the issue, and many of them have agreed to settle and take advantage of the beneficial terms proposed by the City. We encourage affected companies to contact the Department of Finance to resolve the issue if they have back periods for which taxes are owed.”
A group representing Times Square billboard renters has accused the city of unfairly targeting them.
“The Tax has been around for nearly 50 years – it has never been applied to advertising,” George Lence, a lobbyist for the Times Square Advertising Coalition told the New York Post. “It just seems blatantly unfair.”