Tuesday, October 6, 2009

Comptroller's audit uncovers big loss for city

From the Office of the Comptroller:

The Department of Finance has inaccurately calculated tax benefits for properties under its Section 421(a) program, which will ultimately cost the City more than one hundred million dollars in real estate tax revenues, a new audit by New York City Comptroller William C. Thompson, Jr. has found.

Thompson’s audit determined that the Department of Finance (DOF) incorrectly calculated the taxable assessed value of 48 out of 50 – or 96% - of sampled properties in Manhattan currently receiving 421(a) tax exemption benefits.

“The Department of Finance must immediately correct these inaccuracies so the City does not allow at least $130 million to slip through its fingers,” Thompson said. “The City’s resistance to rectifying this represents financial hypocrisy at its worst; on the one hand claiming that agencies must tighten their belts amid the lingering recession while permitting a faulty process that costs taxpayers, to continue.”

“It is disturbing that an agency charged with collecting taxes is making such costly mistakes,” said City Councilman and Finance Committee Chair David Weprin. “As a result of these errors, we are losing millions of dollars precisely when the City most needs the revenue. This is not acceptable and DOF should make all necessary corrections immediately. I will add that, for more than a year now, the Council has grappled with cuts to vital city programs and services. It frustrates me to learn that, had these millions of dollars not been lost, those looking out for the public interest could have saved just one more public program.”

Thompson’s audit – available at www.comptroller.nyc.gov –found that:

* The DOF incorrectly calculated the taxable value of 48 of 50 sampled properties in accordance with its own methodology.
o As a result, the City did not collect $9,896,149 in real estate tax revenue for 37 sampled properties.
o For 11 properties, the DOF collected excess tax revenue totaling $1,239,558.
* More than $5 million in additional real estate taxes were lost due to improper exemptions.
* If DOF continues to under-bill and over-assess these 48 properties, the City will lose $130.2 million in additional taxes throughout the remaining terms of the exemption benefits.
* The DOF has significant problems with regard to its administration of the 421(a) program, including: inconsistent program records, no written procedures for calculating tax information, and a lack of required documentation for exempt properties.

No comments: