Purpose

The objective of our examination was to determine whether the Property Tax Freeze Credit (PTF Credit) payments approved by the Department of Taxation and Finance (Department) were appropriate and processed in accordance with New York State Tax Law.

Background

The PTF Credit is intended to reimburse qualified New York State homeowners for increases in local property taxes on their primary residences. To receive the PTF Credit in 2014, homeowners must receive the STAR property tax exemption (i.e., the property must be the homeowner’s primary residence and the total household income must be $500,000 or less) and the school district where the homeowner’s property is located must comply with the New York State Property Tax Cap. The Office of the State Comptroller (OSC) approved more than 2.3 million PTF Credit payments totaling $222 million through May 15, 2015.

Key Findings

Using a risk-based approach, we examined 216,164 individual PTF Credit payments totaling $33,175,360. We identified and returned to the Department 5,661 questionable payments totaling $591,902 for follow-up evaluation and appropriate action. Specifically, we returned:

• 2,159 payments totaling $239,848 with incorrect or questionable data and incorrect calculation amounts. This includes incorrect payee and/or address information and PTF Credits calculated incorrectly.
• 1,841 payments totaling $188,523 where either the homeowner or property was not eligible for the STAR property tax exemption. This includes out-of-state residents, household incomes that exceeded the eligibility limit, secondary residences or business properties.
• 909 duplicate payments totaling $62,651.
• 752 payments totaling $100,880 to deceased homeowners.

We also found that while the Department maintains the necessary data to identify incorrect payee and/or address information, out-of-state residents, household incomes that exceed eligibility limits, secondary residences, business properties and deceased homeowners, it did not always review that data prior to submitting payments to our Office for approval. As a result, we returned 25 files containing over 881,000 payments to the Department for correction and reprocessing.

Key Recommendations

• Ensure PTF Credit payment data is complete and correct prior to submitting those payments for approval.
• For the 2015 Tax Year, work with the local assessor offices to ensure data provided is standardized, complete, and accurate.