Wednesday, June 27, 2012

CITY’S PROPERTY TAX COLLECTIONS FROM CELL ANTENNAS STUCK IN A DEAD ZONE

Audit Finds Department of Finance Failed to Uncover Unreported Income from Cell Antennas, Missed $24 Million in Potential Property Taxes
 

   City Comptroller John C. Liu and State Comptroller Thomas P. DiNapoli today announced that a joint audit found New York City’s Department of Finance failed to collect an estimated $24 million in property taxes because it did not use available resources to identify property owners who did not report income from cell antennas.
“As phone companies and cell tower landlords profit handsomely, our taxpayers are entitled to share in that revenue,” Comptroller Liu said. This audit clearly outlines how the Finance Dept. can recover $24 million. That's real money that can stave off anything from tax increases to cuts in public services.”
“During these tough economic times, the city and state need to maximize all sources of available revenue to keep crucial programs running and needed employees like police, firefighters and teachers on the job,” Comptroller DiNapoli said. “The audit findings released today show that with a little creativity and ingenuity the city can benefit tremendously. This audit came about as an effort between our two offices and shows what can be accomplished when we share resources and expertise.”
Owners of commercial properties and large apartment buildings must report income from cell antenna equipment to the Department of Finance (DOF). This income increases the City’s assessed value of the property, which helps determine property taxes.  Auditors used Department of Buildings’ data and other resources available to the DOF to find 2,108 property owners who failed to report income from cell equipment in 2008-2009.  By comparison, in 2009, the agency’s assessors found just 90 properties that failed to report income.
Borough
Properties w/ Unreported Income
2008-2009
Tax Revenue Missed
Manhattan
594
$9.8 million
Bronx
363
$3.5 million
Brooklyn
602
$5.8 million
Queens
489
$4.7 million
Staten Island
60
$0.5 million

Response
The DOF agreed to use additional available databases in order to expand its search for unreported income, to apply cell site income to properties when it verifies property owners have not reported such income, and to consult with the Law Department about imposing penalties on owners who fail to report income.
The agency stated that starting in 2011, when the audit was initiated, it prioritized the accurate valuation of cell sites.
The DOF stated that it failed to collect a potential $10.5 million in property taxes — not $24 million — a figure that it reached by counting 843 properties that failed to report income.  However, the agency’s estimate failed to reflect the 1,711 properties that did not report income identified by the audit.  When adjusted to reflect those 1,711 properties, the agency’s estimate more than doubles and is very much in line with the audit finding.
Background: Property Taxes and Cell Equipment
When the DOF discovers that an owner has failed to report income, the agency adds a preset amount to the property’s income and adjusts the assessed value. Based on DOF estimates, properties north of 125th Street and in the outer boroughs make about $2,000 a month per cell carrier that leases space. South of 125th Street, properties make an estimated $4,000 per month. 

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