New York City Finance Chief Pleads Poor Accounting Amid Second-Home Tax Uproar

After a week of outrage from fulltime homeowners who received letters ordering them to prove their residency or prepare to cough up thousands to pay a new second-home surcharge, the head of New York City’s tax collection agency says his agency may have used out-of-date records to select its targets.Letters to residents about the new pied-à-terre surcharge started going out last week as City Hall rolled out an informational webpage that has raised as many questions as it answers. Now, City Council members are escalating concerns raised by constituents who own just one home but have unwittingly become the Department of Finance’s newest pen pals. Appearing at a press conference alongside Mayor Zohran Mamdani on Wednesday, Department of Finance Commissioner Richard Lee said poor accounting may account for how fulltime New Yorkers got pegged for the new tax on jetsetters. “We used existing information that we have, and it could have been that we don’t have updated information on their applications, their filings, their exemptions,” Mr. Lee told reporters.The department has issued approximately 17,000 letters to homeowners, a finance department official confirmed to The New York Sun on Wednesday. The figure is well above the 10,000 dwellings the governor’s office estimates are actually taxable as high-value, non-primary residences. The new charge is supposed to be levied only on owners of second properties valued over $5 million. During the rollout of the new website, the city listed every single residential address with a homeowner. The roster, which the city was required to make public — though it already is — under the state law that created the surcharge program, added to concerns that the tax would inadvertently hit thousands of middle-class New Yorkers. Asked about the widespread confusion around the sweeping property list released to the public and the exponentially smaller, undisclosed list of surcharge letter recipients — and whether his office could have handled it better, Mr. Mamdani offered a tight-lipped smile and said his administration was “following through with the law.”Compounding confusion over who will be subject to the new law, Mr. Lee acknowledged the challenge of taxing residents of co-op buildings, which receive a single property tax bill that is then divided up among unit owners. Under the new law, if just one owner qualifies for the tax because they use their unit as a part-time second home, all unit owners could see their tax bill rise. The head of the city’s finance department said his office was working with co-op boards to address that concern, calling the tax issue “a little bit of a new territory for us.”One New York-based real estate attorney, Andrew L. Jagoda, characterized the pied-à-terre surcharge rollout as a mixed blessing. It is “a clumsy way to overcompensate for the fact the city does not have access to personal tax records,” he said in an interview with The New York Sun. “Fortunately for what remains of our free society here, the city government does not have free access to tax records. Mamdani can’t scroll through your income tax records,” Mr. Lagoda said on a phone call Wednesday. “So, what they had to do was throw a big net around any property that seems to have a value over this number. Then they decided to send you the notice, and you have to prove you’re innocent.” While the burden for demonstrating that a property is a primary residence isn’t onerous, according to Mr. Lagoda, he is advising clients to fill out their paperwork as soon as possible.“ You know the city of New York. If you send something in, they might not look at it right away or it might get lost in the mail or it might get misplaced. So the best thing to do is to file it right away so you have plenty of time for it to get there.”

New York City Finance Chief Pleads Poor Accounting Amid Second-Home Tax Uproar

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