STAR Rebates: New York nearly had a $6M gaffe
May 1, 2018
Whew, that was a close call.
In the crush to send out more than 2.8 million checks to homeowners for property-tax relief, the state tax department nearly dished out $5.8 million in rebates in error, an audit Tuesday found.
The state Department of Taxation and Finance sent out checks totaling $740 million to homeowners between July 1, 2016, and June 30, 2017.
The checks needed the sign off of the state Comptroller's Office, and it said in an audit Tuesday that it "identified and returned" 15,313 questionable or inappropriate credits totaling $5.8 million.
The money was blocked before it was sent out.
The problems, Comptroller Thomas DiNapoli's office said, were because of one of several factors, such as calculation errors; the intended recipients had died; it was a duplicate payment; or a homeowner was not eligible.
The problems were likely the result of the tax department having to deal that year with three tax-rebate programs and also grappling with delays in getting the money out to homeowners.
That wasn't all: The comptroller said the agency also found 186,747 of the 2.8 million checks had to be corrected and reprocessed — separate from the roughly 15,000 that were blocked.
"Department officials generally agreed with our recommendations and stated they will continue to enhance and establish controls to ensure credits sent to (the Comptroller's Office" for approval are appropriate," DiNapoli's office said.
The tax department was under extraordinary pressure that year as the state Legislature and Gov. Andrew Cuomo made several changes to state rebate programs.
For one, a STAR rebate for homeowners' school taxes was changed from an upfront savings on tax bills to a check in the mail for new homeowners.
And in its first year in 2016, the state struggled to get the checks out in time for new homeowners to pay their school tax bills by, in most cases, the end of September.
In some cases, wrong amounts were sent out.
Also, the agency was juggling two other rebate programs: A check to homeowners for the growth in their property taxes, called a tax freeze; and the first year of a "property tax relief credit."
The Comptroller's Office recognized the tax department's efforts to "identify and stop inappropriate credits" and said the agency is bolstering its technology to handle all the tax rolls it needs to analyze to send out the check.
This fall, homeowners will receive a check for a portion of their school taxes tied to household income — if they earn $275,000 or less a year.
For its part, the tax department said it continues to improve its systems — particularly getting the STAR checks out before new homeowners' taxes are due.
In a response attached to the audit March 23, the tax department noted that 99 percent of the checks that were processed were approved by the Comptroller's Office.
The agency said it has to rely on tax data from nearly 4,000 taxing districts in New York in order to send out accurate rebate checks.
"Our collaborative efforts benefit property owners and New York state government, and we look forward to continuing our work together on these and other programs," Edward Chaszczewski, the tax department's deputy commissioner, wrote to DiNapoli's office.