Comptroller Scott Stringer. Costly Mistake by Department of Finance
Comptroller's audit: Department Of Finance mistakenly gave away $10 million in property tax abatements to corporations.
Corporate-owned condos and other properties such as indoor parking spaces and gardens were granted more than $10 million in improper tax abatements over the past 4 years because the New York City Department of Finance failed to conduct basic document checks, according to an audit released today by New York City Comptroller Scott M. Stringer.
“The City handed out millions in tax abatements to corporate-owned condos, parking spots and cabanas because no one bothered to review basic tax records,” New York City Comptroller Scott M. Stringer said. “This money could have been used to fund our schools, put more police on our streets and help house our homeless but instead they lined the pockets of LLCs and corporations. The Department of Finance needs to significantly step up its game and collect all the taxes the City is owed.”
The audit investigated the Department of Finance’s administration of the Co-Op/Condo Tax Abatement during Fiscal Years 2013-2016. The abatement is designed to give individual homeowners in co-ops and condos tax relief through a partial property tax reduction. A 2013 amendment to the law clarified that to receive the abatement, the property must be the owner’s primary residence, and it cannot be owned by a corporate entity. During Fiscal Year 2015, there were 35,335 condominium units that received abatements totaling $76.46 million, and 226,284 cooperative units that received abatements totaling $322.98 million.
Although the law specifically states that only individual owners can receive Co-Op/Condo Tax Abatements, auditors identified 1,085 condos owned by corporate entities that incorrectly received abatements.
The remaining 36 abatements were originally granted for ineligible, corporate-owned condos. When auditors asked to see the supporting documentation to determine how this occurred, the Department of Finance was unable to locate any files for 75% of the units.
Between Fiscal Years 2013 and 2016, these improper abatements cost the City $9,858,638 in lost tax revenue.
Auditors also identified abatements that were given to 164 non-residential properties. These abatements were incorrectly granted because the Department of Finance neglected to check its own records to see if the units were commercial or residential.
The tax abatements were given to:
The audit contains a dozen recommendations, including that the Department of Finance:
“Every tax dollar counts. It’s time for the Department of Finance to take action now and recoup these lost millions on behalf of all New Yorkers,” Stringer said.
Press release from Comptroller’s Office
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