The Office of the City Comptroller has
filed a lawsuit, asking the New York State Supreme Court to issue an
order enforcing the Comptroller’s rights under the City Charter to
access the Department
of Finance tax records necessary to audit Finance’s collection of the
General Corporation Tax (GCT).
The purpose of this audit is to determine
the security and reliability, including the accuracy and completeness,
of the assessment and collection of the GCT by Finance. Like all audits,
the GCT audit is being
done to safeguard the interests of New York City and its taxpayers.
GCT is a
tax paid by domestic and foreign corporations that conduct business
activities, utilize capital, own or lease property, or maintain an
office in New York City. In addition,
the GCT makes available many exemptions, deductions, and credits. It
is estimated that the GCT for this year could be as high as $3 billion.
“It is our duty as the City’s fiscal
watchdog to monitor this enormous tax collection enterprise and verify
that it is fair to all and that the interests of all City taxpayers are
being protected,” said City
Comptroller John Liu. “Finance is asking us to take its word that the
collection of these funds is being properly handled. We don’t do that
for any other agency and we will not do it for the Department of
Finance.
“For decades Finance has been hiding
behind an inaccurate interpretation of law to deny the City
Comptroller’s Office the information it needs to ensure that
corporations doing business within the five boroughs
of New York City are paying their fair share.”
Our office has asked the Court for an
order granting it access to records from Finance’s “FAIRTAX” computer
system, which contains business tax return information and other vital
data relating to how Finance
processed the GCT returns. Finance has denied us those records, citing
tax-secrecy provisions, even though the City Charter states that the
Comptroller is “entitled to obtain access to agency records required by
law to be kept confidential.” Finance relied
on a 1991 Opinion of the Corporation Counsel, which the Corporation
Counsel reaffirmed in response to our October 2013 subpoena for the GCT
records.
The Comptroller’s Office routinely
receives confidential information from City agencies when performing
audits. The court order we are seeking would enable us to audit the
collection of the GCT and other City
taxes that account for close to seven billion dollars.
“After more than 20 years, we are asking the court to resolve this issue once and for all,” said Comptroller Liu.
Background:
“Section 93(c) of the NYC Charter provides, in relevant part (highlighting added):
The comptroller shall have power to audit all agencies, as defined in
subdivision two of section eleven hundred fifty, and all agencies, the
majority of whose members are appointed by city officials.
The comptroller shall be entitled to obtain access to agency records required by law to be kept confidential,
other than records which are protected by the privileges for
attorney-client communications, attorney work products, or material
prepared
for litigation, upon a representation by the comptroller that necessary
and appropriate steps will be taken to protect the confidentiality of
such records.
In addition to the power to audit agencies under § 93(c), the Comptroller has:
the power to audit and investigate all matters relating to or affecting
the finances of the city . . . and take the testimony under oath of such
persons as the comptroller may deem necessary.”
N.Y.C. Charter § 93(b). The power to take testimony under § 93(b) includes the power to subpoena documents.
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