REAL ESTATE TAX ASSESSMENT CAP

Congress has delivered an expensive and unwanted gift to New Yorkers.  Everybody in the United States can deduct the cost of their residential and commercial property taxes and their state income taxes.  But now there is a cap of $10,000 in total. If your property tax is $12,000 you can only deduct $10,000 and you cannot deduct any of your New York State or New York City income taxes. In it more imperative this year than ever to have your property taxes checked in Nassau, Suffolk, New York City and villages to make sure you are not being assessed too much.  Happy Holidays!

Richard Fromewick Authors “Taking the (Illegal) Tax Out of Property Taxes…”

In a decision with implications for EVERY commercial property owner in Nassau County, a State Supreme Court Justice has ruled that Nassau County’s ASIE penalties amount to an illegal tax.

Starting in 2013, Nassau County sought to raise revenues by drastically increasing penalties against commercial property owners who they claim failed to file an Annual Statement of Income and Expenses (ASIE).

In addition to crippling fines, the County also threatened to slap liens on the properties.

The County’s stated purpose was to secure more and better information with which to set fair and accurate assessments. Though the County offered no proof about the amount of data required or the impact of the missing ASIE information on the Assessor, suddenly missing or incomplete data was the root of all of the County’s famous assessment woes.

However, over the course of a year’s worth of litigation a secondary rationale emerged: penalizing commercial property owners based on the value of their property could deliver multimillions into the County’s chronically empty coffers.

Ultimately, the Court found that none of the money collected was ever allocated for assessment purposes. This was an illegal “backdoor” tax from the jump.

Without approval from Albany, Nassau County could not legally implement this new tax on commercial property owners.

Property owners who feared liens that would have held their properties hostage have already paid over $1,000,000 to the County pursuant to this unlawful cash-grab.

An appeal by the County seems inevitable, but in the meantime, Nassau’s beleaguered commercial property owners have an early Christmas gift.

If you own ANY property in Nassau County, you owe it to yourself to have a professional review your real estate tax burden. Let Meyer Suozzi provide you with a free property tax checkup. Paying taxes is your obligation. Paying only your fair share is your right (but ONLY if you enforce it)!

Lifetime Achievement for Tax Certiorari

There is a benefit to staying in one law firm and reducing real estate taxes for over 36 years -  I am proud to report that at the Long Island Business News’ Leadership in Law Awards ceremony at the Crest Hollow last night – I was presented with the Lifetime Achievement Award.

Many attorneys change jobs every few  years, motivated by either unhappiness or great expectations.  My chosen field gives me great pleasure, almost every single day.  To be able to improve a person’s financial conditions on their home or business – it’s a great feeling and one that I expect to continue at Meyer Suozzi for many years to come.

Real Estate Changes – Who Will Be The New Assessors?

There are big changes for Long Island’s government - Nassau County, Suffolk towns and both County’s legislatures have new players. Will this affect your real estate taxes? Not in the short run. However, in the future, I expect reassessments in most Long Island towns and villages.  There will probably be more early hearings on tax protest/grievances/complaints so assessments can be changed before tax bills are prepared.  Now is the time to make sure your property assessment is at the lowest level allowable so if changes are made you start on a lower footing.

Should Everyone File for Real Estate Tax Reductions?

I hear all the time, “I am not over-assessed but my real estate taxes keep going up. Why?” The answer is complicated – who knew real estate taxes would be so complicated?
I then ask, “who told you that you are not over-assessed on your home [or factory or gas station or office]?”

I am often met with similar responses. If you got your answer from the Assessor or County website, it’s not going to give you accurate information. The websites are created by the Assessors and often have misleading information – old, undated and often wrong market values. You need someone experienced to guide you through the process. Due diligence is not only for Fortune 500 mergers. Good investigating skills will put you ahead of the game. Do it right and you will be rewarded with lower taxes or by the fact that you are being assessed correctly and are not getting taken advantage of by the system.

Nassau County School Tax Increase

The Nassau County school tax rates, as of October 1, 2017, increased an average of 5% for residences. A typical $10,000 school tax bill from last year will be $10,500 this year. The Nassau school tax rates for commercial properties had a big increase last year, averaging 11%. This year, another 5% increase on average is expected. Therefore, a typical $25,000 commercial tax bill from last year will be $26,250 this year.

The tax rate increases are due, in part, because school budgets increased and many residential and commercial properties received assessment reductions. Having less total assessments in the school district causes the tax rate to increase to meet the budget.

The reason for the substantial commercial tax rate increase is in great measure due to the now 2 year old Disputed Assessment Fund (DAF). Every commercial property received the increase and those properties that protested have part of their taxes set aside for possible refunds.

The expectation is that the general taxes will increase at least the same in January.

Higher Nassau County Taxes on the Way

Be on the lookout: October 1, 2017 is the date for the first half 2017/18 school tax bill in Nassau County.  If a protest, grievance, or complaint to the real estate tax assessment was filed in January 2016 (that’s right, 22 months ago), you might see a lower assessment on the tax bill.  Of course, you might also see a higher tax rate.

If you do not receive the tax bill directly, go to: http://www.mynassauproperty.com,  and check it out.
In Suffolk County, you will need to visit or call the individual town for your current assessment. Those higher taxes will come in the December bill.

Real Property Valuation – Artificial Intelligence

It’s coming… Actually, it’s already here.  Artificial intelligence (AI) is being used to value properties for tax assessment of real property taxes.  If sales in your neighborhood are going up, chances are that when re-assessment comes, your taxes will go up.  Computer software is precise when analyzing real property data, taking hundreds of sales prices and making comparisons that include number of bedrooms and bathrooms and land sizes.

What AI cannot do however, is identify old kitchen or bathroom appliances or 1960’s room colors or landscaping. It takes a human being, and really a land valuation appraiser or attorney, to determine traffic and parking problems or access to schools, shopping and public transportation.  There is a reason why so many commercial and residential properties receive real estate tax assessment reductions – AI alone does not do a good job of valuing real property.

Real Estate Tax Reductions Can’t Be Won if Authorizations Aren’t Signed & Submitted

This year as in every other year for the past 36 years; I have filed real estate tax protests a/k/a grievances a/k/a complaints to the dozens of assessor’s offices in the metropolitan area.

The authorization to file for tax assessment reduction must be signed by an aggrieved party. Every year some of the firm’s clients do not send back to us a timely signed authorization. It isunintentional, in most cases, but still surprisingly neglectful for a taxpayer to not timely authorize the filing of the protest to the tax assessment.

In those cases, the attorney in charge of the proceeding typically signs the authorization, as the attorney, in order for the protest to be filed. Failure to timely file the protest is fatal; no assessment reduction or refund can be obtained that year. In most assessing jurisdictions there is a grace period to file an authorization when signed by the aggrieved taxpayer.

I stress every year that all of our clients that seek assessment reduction timely send us the signed authorization – remember failure is fatal.

Annual Survey of Income and Expense (ASIE) Penalties in Nassau County

The saga of Nassau’s exorbitant and probably illegal ASIE penalties imposed on commercial taxpayers continues. As of now, only Plaintiffs specifically named in the current lawsuits are expected to be entitled to evidentiary hearings. Attorneys at Meyer Suozzi are preparing an additional lawsuit to add taxpayers faced with the ASIE penalties. Previous attempts by the County to impose penalties were limited to $500, so we believe that all the taxpayers who now oppose their penalties will be granted hearings.

ASIE Penalty Hearings

The court has made an interim decision staying the collection of ASIE penalties for those taxpayers that started a lawsuit against Nassau County.

Hundreds of other taxpayers who have not started a lawsuit might be entitled to hearings if they start a lawsuit. We are now preparing a lawsuit for taxpayers who want to present evidence at a hearing to modify or nullify the ASIE penalty.

The ASIE penalties are separate and apart from any tax certiorari proceeding to reduce the real estate tax.

ASIE financial statements must be answered each year that they are requested by the Nassau Assessor or penalties are imposed.

The court is still waiting for a decision from the Appellate Division before making a final decision.

Suffolk County Real Estate Taxes

The new tax assessments for ten towns in Suffolk County: Huntington, Babylon, Smithtown, Islip, Brookhaven, Riverhead, Shelter Island, Southold, East Hampton, Southampton, will be published on May 1, 2017 and must be protested by May 16, 2017- a very short window.

Although the assessment might remain the same as last year, the ratio of assessment to market value changes each year. Therefore, the assessor’s estimate of market value might increase without any assessment increase. Of course, the taxes will almost certainly increase this year. Therefore, it is prudent to have each property tax assessment reviewed each year.

Nassau Real Estate Tax ASIE Penalty

Meyer Suozzi, along with several other law firms, won a further extension of the temporary restraining order preventing Nassau County from collecting the penalties. The County is asking for a guarantee of payment, undertaking (bond) until the issues are finally decided. That hearing will be held on April 20. 2017. The court is considering appointing a special master/referee to conduct hearings and determine the penalties, if any.

It is important to complete any ASIE information requests to prevent new penalties from being imposed. It does not appear, from my perspective, that the ASIE requests are illegal or unconstitutional; however, I believe the current method of enforcing penalties is illegal and unconstitutional.

Nassau Disputed Assessment Fund (DAF)

Many commercial properties in Nassau County have seen their January 2017 general tax bill increase.  The claim is that the October 2016 school tax bill had a decrease for the DAF.  However, there was a substantial tax rate increase on the school and general tax bills.  We have protested the DAF for all of our commercial clients with our complaints to reduce the tax assessment.  With only a few days left until the March 10^th deadline, everyone should have their assessment checked.

Nassau County Assessor’s Income & Expense Statement (ASIE)

Justice Marano of the Nassau County Supreme Court, after hearing arguments from commercial taxpayers’ attorneys, and County lawyers continued the restraining order which prevents the County from collecting ASIE Penalties until further notice. The next court date is scheduled for March 30, 2017.

The Assessor is still entitled to send out new ASIE requests and, if not returned, there will be penalties. If you received a notice of penalties, gather documentation to produce at a hearing. I suspect the Court will either cancel the penalties or order the County to conduct evidentiary hearings before penalties can be collected.

Annual Survey of Income and Expense (ASIE) forms - A Reprieve From Penalties

Nassau County commercial property taxpayers won a reprieve from the penalties for failing to file the Annual Survey of Income and Expense (ASIE) forms with the Assessor.

The Court extended a restraining order barring Nassau County from enforcing hundreds of thousands of dollars of penalties against County businesses that were fined for allegedly not filing required financial reports with the County Assessor.

Nassau had warned commercial property owners in December that it would turn the fines into liens, accruing 12 percent interest annually.

Newsday Article Hits the Nail on The Head

The Newsday article featured on February 2, 2017, “Mangano’s Overhaul Created $1.7B Property Tax Shift in Nassau,” is right on the money. The article, which discusses residential and commercial real estate tax assessments in Nassau County, accurately explains that your taxes go up when anyone else receives an assessment decrease. The County website, mynassauproperty.com, understates the market value the assessor uses to compute your taxes by 40%.

ASIE Penalties Held in Abeyance

The Nassau Supreme Court has stopped Nassau County from collecting the penalties for failure of commercial properties to provide income and expense information.  There will be a further hearing on February 8, 2017. 

It is clear to me, that many of our firm’s clients have documentation that the Annual Survey of Income and Expense (ASIE) forms were sent to the County.  Other property owners never received the requests.  Still other were not the owner of the property during the years the ASIE forms were to be filed. The ASIE penalty is based on a percentage of the property’s market value.  That value has, in many cases, been reduced by settlement.

New York City also requests commercial properties to file a Real Property Income and Expense form (RPIE).

However, that procedure is much simpler and fairer to the property owners. 

Bottom line – if you receive a request from the Assessor to report your property (not business) income, the failure to comply can be costly.

The Disputed Assessment Fund (DAF)

Nassau County commercial real estate taxpayers received a very expensive tax bill this year.  New York State allowed Nassau County to create a special additional DAF tax to create millions of dollars to be available for refunds when the Nassau assessor over assesses commercial real estate.  Property owners are being over-taxed to correct the over assessment of their property.

The only way to have this extra tax removed is to file a complaint by March 1, 2017, or that onerous and possibly illegal tax will remain.  Adding insult to injury, the tax rate was dramatically increased for most properties.  This extra tax is a devastating blow to many commercial taxpayers – more taxes means less profits.  The DAF lowers the market value of your property and adds to the burden of conducting business in Nassau County.

The time is now to have your assessment reviewed.