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Our attorneys stay on top of changes in legislation, agency regulations, case law, and industry trends—then craft timely legal alerts to keep clients up to date on legal developments important to their business.

March 15, 2013

Star Light"¦Star Bright"¦Proposed Changes to Star Tax Breaks in Sight.

The STAR program provides school tax breaks to residential property owners who use their property as a primary residence. It applies only to individuals who make less than $500,000 a year. An enhanced STAR program provides additional benefits for elderly residents with incomes of $74,100 a year or less.

A recent audit of the program conducted by State Comptroller Thomas DiNapoli found that almost 20% of STAR property tax exemptions in 46 municipalities state-wide were erroneously or improperly granted. The study further estimates that improper or faulty STAR exemption filings cost the State of New York $13,000,000 in fiscal year 2011/2012. DiNapoli estimates that lost revenues to the State will increase to $73,000,000 by fiscal year 2015/2016 if the program continues in its current form.

Moreover, DiNapoli points out that errors and/or abuses are difficult to spot, because STAR exemptions (like other Real Property Tax exemptions) are granted on a per municipality basis by the local assessor. In an effort to combat errors and stem financial losses, Governor Andrew Cuomo has proposed a unique fix to the STAR program in his current budget proposal. Cuomo's proposal would create oversight for the program on a state level, through the State Department of Financial Services, which would be in charge of confirming eligibility for the tax breaks via income tax returns. In addition, the budget proposal would require all residential property owners (including those who currently receive STAR benefits) to reapply for their STAR certifications.

While the proposed program overhaul would provide State oversight of the program, local assessors would still have their hands full with distribution of revamped exemption forms and the re-filing of application forms by residential property owners. Assessors would also be required to transfer information to the State. Thus, the Governor's proposed legislation tightens loop-holes, enhances enforcement, and ultimately, may save money. The real result will likely be that local assessors will bear the greatest responsibility (and cost) for implementing the Governor's proposed changes.

If you require further information regarding the information presented in this Legal Alert and its impact on your organization, please contact any of the members in our Real Property Tax & Condemnation practice area.

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