Purpose

The objective of our examination was to determine whether personal income tax refunds (refunds) and property tax freeze, property tax relief, and school tax relief (i.e., STAR) credits (collectively referred to as credits) approved by the Department were appropriate and complied with New York State tax laws and regulations. Our Office examined refunds processed by the Department of Taxation and Finance during the period January 1, 2018 through December 31, 2018.  In addition, our Office examined credits processed by the Department during the period July 1, 2017 through December 31, 2018.

Background

During our examination period, the Department approved and submitted to our Office 7.7 million refunds for payment totaling over $10 billion.  In addition, the Department approved and submitted to our Office over 4.9 million credits for payment totaling nearly $1.7 billion. 

Key Findings

We returned 12,783 questionable or inappropriate refunds totaling $41.3 million to the Department for follow up evaluation and appropriate action.  In addition, we returned 13,097 credits totaling $6.9 million to the Department for follow-up evaluation and appropriate action.

Key Recommendations.

• Review 12,783 refunds totaling $41.3 million identified in our examination to determine whether these are appropriate.
• Review the 11,059 questionable or inappropriate credits totaling $5.9 million we identified to determine whether these credits are appropriate.
• Review the 2,038 credits with incorrect mailing addresses totaling $1 million we identified, and resubmit with valid and correct mailing addresses.
• Improve integrity and formatting issues with the Department’s data files containing credits.
• In accordance with Real Property Tax Law, ensure eligibility determinations are made using the appropriate tax year’s income.
• Continue working with our Office to identify and implement opportunities to help detect and prevent erroneous credits and refunds.