A day after Rockland County announced an amnesty program for homeowners who improperly claimed school property-tax exemptions, state Comptroller Thomas DiNapoli released an audit today that estimates improper and duplicate School Tax Relief — STAR — exemptions cost the state $13 million during the 2010-11 fiscal year and could exceed $73 million by 2015-16. The audit said “administrative shortcomings” in the STAR program led to the errors and abuse.
The STAR program provides homeowners within a certain income range to get an exemption in school taxes for their primary residences. Basic STAR is for homeowners with incomes less than $500,000. Enhanced STAR, for senior citizens, provide an additional benefit if homeowners’ income is $74,100 or less. The state makes up the difference in property-tax revenues for school districts.
There were 2.77 million basic STAR exemptions and 624,474 enhanced STAR exemptions statewide in the 2010-11 fiscal year. The cost to the state for underwriting benefits grew from $582 million in 1998-99 to $3.2 billion in 2010-11. It is expected to cost more than $3.7 billion by the 2015-16 fiscal year.
This is a statement from DiNapoli:
“The STAR program has succeeded in delivering million of dollars in tax relief, but it is difficult to ferret out abuse or even errors because it is hard to police the program. STAR exemptions could be easily gamed at a significant cost to the state. New York cannot afford these abuses. Some local assessors have taken it upon themselves to track down improper exemptions but state and local officials need to work together to ensure legitimate tax breaks are only provided to those homeowners entitled to receive them.”
Auditors in DiNapoli’s office examined more than 6,500 properties in 46 municipalities that received STAR exemptions, including Carmel, Greenburgh, Mount Pleasant, Yonkers and Yorktown. Nearly 20 percent were duplicate or improper exemptions, they found. In most cases, it was for property that wasn’t the owners’ primary residence and seasonal property. In some instances, homeowners had died and relatives who inherited the property continued to get the exemptions. Banks and corporations also received exemptions improperly, the audit said.
Part of the problem is the STAR program application doesn’t require information that identifies property owners, such as Social Security numbers. That makes it harder for local assessors to track duplicates. Assessors don’t have access to state databases that would allow them to track STAR exemptions outside their jurisdictions, the audit said.
DiNapoli recommended that the state require a unique identifier for STAR applications to monitor exemptions more easily; allow local assessors access to property databases maintained by New York and other states; and strengthen enforcement by increasing fees and penalties for violations.
The audit cited Greenburgh as a municipality that has worked actively to reduce the number of improper exemptions. The town is piloting a software program designed to identify duplicates.
Rockland County District Attorney Thomas Zugibe announced yesterday that his Special Investigations Unit had uncovered more than $679,000 in improperly or fraudulently claimed STAR exemptions from 2012.