From the NY Times:
At the peak of the real estate boom, the owners of a four-story building with a couple of huge billboards in Times Square failed to report money that they received from renting the signs, evading tens of thousands of dollars a year in property taxes.
The owners went further than just omitting the billboard income; they appealed to the city for a reduction in taxes for six consecutive years. But after an investigation by the Manhattan district attorney, Cyrus R. Vance Jr., the owners paid $240,000 in back taxes as part of an agreement settling the matter.
On Wednesday, the grand jury that heard evidence in the case, as well as two others that resulted in indictments, issued an unusual report recommending a series of what it said were “desperately needed” changes to the city’s property tax system, including civil sanctions and stiffer penalties for landlords who file false documents and information.
The report suggests that this kind of tax evasion may be widespread, citing a survey that found that 60 of 100 property owners cited by the Buildings Department for improper permits had failed to report signage income to the Tax Commission.
“Reform is desperately needed,” the report said, to protect the integrity of the city’s tax system and to “maximize the tax receipts that are currently lawfully due.”
City officials, who testified extensively before the grand jury, said it was impossible to know how many of the city’s one million property owners were evading taxes by filing false income and expense statements with the Finance Department or the Tax Commission. But with $17 billion in property taxes collected in 2011, Glenn Newman, president of the Tax Commission, said “even a small amount of fraud can result in real money lost.”