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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