Purpose

The objective of our examination was to determine whether Property Tax Freeze, Property Tax Relief, and STAR credits processed by the Department during the period July 1, 2016 through June 30, 2017 were appropriate and complied with New York State Tax Law.

Background

The Department’s administration of Property Tax Freeze, Property Tax Relief, and STAR credits began at various times, with the oldest program (the Property Tax Freeze program) beginning in levy year 2014. Each of these credits are intended to offset the cost of property or school taxes on a qualifying homeowner’s primary residence. The qualifications for these credits vary between programs. Further, each program disqualifies a homeowner from receiving the credit when his or her income exceeds a maximum threshold amount. The Department approved over 2.7 million property tax payments totaling over $740 million through June 30, 2017.

Key Findings

Using data analytics to examine high risk transactions, we identified and returned 15,313 questionable or inappropriate credits for $5,779,567 due to calculations errors, deceased taxpayers, or duplicate payments or home owner or property not eligible.

In addition, we worked with the Department to return 20 payment request files prior to the completion of our examination due to the significant volume of issues identified. These payment files contained 186,747 of the 2,757,164 credits submitted by the Department, and included issues such as: (i) invalid primary residences, (ii) deceased homeowners, (iii) taxpayers with income exceeding the limits, (iv) duplicate addresses, and/or (v) data integrity or formatting issues.

Key Recommendations

• Enhance and/or establish controls to ensure credits sent to OSC for approval are appropriate.
• Continue to work with local taxing jurisdictions to make improvements to collect accurate and complete information.