D.A.: Widespread Abuse of STAR Property Tax Breaks Discovered in Rockland

An investigation of a state-backed tax break program for property owners has led to the discovery of more than 500 cases in Rockland County in which the tax breaks were illegally obtained and investigators believe there may be thousands of additional cases in Rockland's five towns.

Rockland County District Attorney Thomas Zugibe said his office plans on prosecuting property owners who illegally obtained the STAR school tax breaks. However, Zugibe today announced an amnesty program that will run through April 1, 2013, that will allow property owners to pay up their back taxes and avoid criminal prosecution.

During the past 11 months, detectives in the Special Investigations Unit  of the District Attorney's Office uncovered more than $679,000 in improperly or fraudulently claimed STAR exemptions from 2012.

“STAR is only available on your primary residence, but our investigation has identified dozens of individuals who own two homes and get the exemption on both," Zugibe said. "Our figures represent the tip of the iceberg. Those who double-dip STAR exemptions are cheating the system, at a time when the state’s finite resources are of critical importance.”

Zugibe revealed the investigation and the amnesty program this morning at Ramapo Town Hall, where he met with town officials from throughout Rockland County as well as representatives of local firefighters. The tax investigation, Zugibe said, was an offshoot of an ongoing effort by emergency services officials to crack down on slumlords who illegally subdivide buildings and create sub-standard - and dangerous - living conditions.

The probe was launched after a 2011 fire in Haverstraw, where a volunteer firefighter was nearly killed when be became trapped in an illegally divided home. In the aftermath of the fire, firefighters questioned whether the the property owner and illegally claimed a STAR tax exemption.

STAR is New York's version of a homestead exemption or a property tax discount for an owner-occupied primary residence. The state provides homeowners with two levels of partial exemptions from school property taxes:

Basic STAR
Basic STAR is available for owner-occupied primary residences where the homeowners' and their spouses’ income is $500,000 or less. Under the basic exemption, $30,000 is taken off the assessed value of the primary residence for the purposes of school taxes, which in many locations is the largest component of the property tax burden.

Enhanced STAR
Enhanced STAR provides an increased benefit for the primary residences of senior citizens (age 65 and older) with qualifying incomes. The Enhanced option exempts the first $63,300 of the full value of a home from school taxes as of 2013-14 school tax bills. This exemption is increased annually according to a cost-of-living adjustment.

To be eligible for Enhanced STAR, the combined income of all owners and their spouses must be $79,050 or less.

STAR exemptions apply only to school district taxes. They do not apply to property taxes for other purposes, such as county, town or city, except in New York City, Buffalo, Rochester, Syracuse and Yonkers, where city property taxes fund public schools.

Because STAR homeowners are taxed at the lower value, their bill is reduced, often by thousands of dollars. New York State makes up the difference to local school districts. The program costs about $2.66 billion annually.

A homeowner may have either a Basic or Enhanced STAR exemption, which is applied to a primary residence only. Not all of the owners must use the property as a primary residence, just the one applying for STAR. You can only have one primary residence.

As part of the STAR exemption crackdown, subpoenas were given to local assessors’ offices in Rockland's five towns for STAR locations that were believed to be non-owner occupied. Additionally, the District Attorney’s Office received addresses that were the subject of building code and fire code complaints. As a result, 516 locations were preliminarily identified as being in violation of STAR qualifications with many more locations to be investigated.

Zugibe said software program used by the Town of Ramapo’s assessor offers the ability to cross-reference exemption locations with other municipal databases. With the help of this technology, more than 75 homeowners were identified during this process as living out of state or overseas, while illegally receiving the STAR exemption. A confirmation process is currently underway to positively corroborate these suspicions.

In the Town of Ramapo alone, the STAR program costs taxpayers about $26 million annually.

Zugibe said that if the cross-reference techniques applied by Ramapo were utilized by other municipalities, the number of possible STAR violators would increase exponentially across the county. The savings statewide could reach into the hundreds of millions of dollars.

As part of the amnesty, those who have wrongfully taken exemptions have until April 1, 2013, to take corrective measures and make good on their financial obligations. Those violators who fail to take advantage of the amnesty face considerable consequences, including criminal charges of theft, potential arrest, sizable fees and court costs and a criminal record, Zugibe said.

Zugibe said that as soon as the amnesty program expires his office will be making arrests of property owners suspected of deliberately abusing the STAR tax breaks as part of their businesses as absentee landlords.

“Misuse and abuse of STAR exemptions is a statewide problem," Zugibe said. "We believe this unique effort to discover and eliminate fraud in the program will cut down on the number of violators, while recouping hundreds of millions of dollars for the state,” said Zugibe. “Our program presents offenders with an opportunity to correct the tax rolls and make a new start.”

To correct a STAR application and make restitution, contact your local tax assessor’s office or visit www.tax.ny.gov for additional information.