To Keep STAR Tax Break, You'll Need to Reapply by Dec. 31

11:39 AM, Aug 16, 2013   |    comments
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By Joseph Spector

Albany Bureau Chief

ALBANY More than 2.6 million New York property taxpayers who receive the School Tax Relief exemption will soon have to reapply for the benefits as part of a massive state undertaking to root out fraud in the $1.9 billion system. 

In the coming weeks, homeowners will receive a letter instructing them to reapply for the STAR program online or by phone by Dec. 31. People will need to verify their salaries, Social Security numbers and primary residence.

The initiative, approved as part of the state budget last March, will seek to stop some property owners from claiming the tax breaks on multiple homes. An audit in March found widespread abuse of the STAR program, and the state is hoping to save at least $1 million a year from the new system.

"By the state having a role in confirming that each homeowner receives only one STAR exemption and that it's on their primary residence, we can ensure that fraud and waste are eliminated," said Geoffrey Gloak, a spokesman for the state Department of Taxation and Finance. Gloak says this is the first time in 15 years that such a request for reapplication has been made.

Enacted in 1998, the STAR program provides a partial exemption from school taxes for most homeowners with incomes less than $500,000 on their primary residence. The state's enhanced STAR program provides an additional benefit for senior citizens.

The registration will not affect this year's tax bills, nor will it affect enhanced STAR. Seniors are required to register every year to receive the enhanced STAR exemption. About 650,000 seniors receive enhance STAR, costing the state about $840 million.

New York has among the highest property taxes in the nation, and the program funded by the state aims to blunt some of the pain. In 2011, homeowners saved on average $641 through STAR and $1,205 for enhanced STAR.

But in order to ensure the continuation of the tax break, homeowners will need to fill out the new application. Otherwise, the state will notify local assessors to strip taxpayers of their STAR benefits when school-tax bills go out in fall 2014.

If people miss the deadline, there will be an appeals process, but it could be laborious and require STAR tax breaks to be refunded to people after the full tax bill is already paid.

Local assessors said they expect an influx of calls and concerns from taxpayers about the new registration process - even though it's being run by the state.

"We're just going to have to wait and see how all it plays out," said Stephen Robson, the assessor in the Town of Pittsford, Monroe County. "The fact that the people who have STAR are used to contacting their local assessor's office is where the hitch is going to be."

Edye McCarthy, the assessor in Greenburgh, Westchester County, said she's bracing for angry phone calls when people miss the deadline and then get hit with a higher bill.

"They are not going to realize it until they get their tax bills, and that's going to be the fun time," she said.

The new registration for basic STAR will only be for one year, but new property owners will have to go through the process in future years, as well as file with the local assessor's office. The state is also toughening penalties for fraudulent STAR claims.

The state tax department plans a series of outreach events across the state to aware people of the new requirement, such as attending public meetings and hosting a tent at the State Fair in Syracuse.

The state has tightened eligibility for the STAR program in recent years. In 2011, the growth in STAR exemptions was limited to 2 percent a year. A year earlier, it was limited to those earning $500,000 or less.

An audit from Comptroller Thomas DiNapoli in March found that the program had duplicate and improper exemptions for property owners. He said the state lost out on $13 million during the 2010-11 fiscal year and potentially $73 million by 2016.

The problem, DiNapoli said, is that local governments can be lax in their oversight. Also, assessors have no simple way of knowing if a homeowner is claiming the tax breaks in two locations.

The new initiative will allow the state tax department to use Social Security numbers to determine if homeowners are getting more than one STAR benefit, Gloak said.

"The reason this is necessary is because local assessors don't have access to what the other 1,000 assessors in the state are doing, in terms of granting STAR exemptions," Gloak said.

The official details of the program are to be released later this month.

If you have questions about the new registration program, call (518) 457-2036

For more information, visit: http://tax.ny.gov/pit/property/star13.htm

 

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