Mismanagement of real-property related taxes and collection by New York City’s Department of Finance may be shortchanging the Metropolitan Transportation Authority of a key revenue stream, according to city Comptroller Scott Stringer.
Stringer said his
In a sample of 179 RPTT returns, said Stringer, roughly $620,000 in RPTT revenue may have not been collected for the city. About 38% of the RPTT collected on any commercial transaction greater than $500,000 goes to the MTA.
The MTA received $346 million and $216 million from the tax in fiscal 2017 and 2018, respectively.
DOF administers collection of the transfer tax, a percentage of which is allocated to a fund for the MTA including New York City Transit, the city’s paratransit system and MTA Bus Co.
Overall, DOF in 2018 reported collecting roughly $39 billion in revenue and valued more than 1 million properties with a total market value of more than $1 trillion.
Stringer, in Sunday’s report, recommended DOF revise its procedures and training protocols to ensure the city adequately collects critical funds from legally mandated real property related taxes.
“We always hear how the MTA is ‘cash-strapped’ — which is why what this audit found boggles the mind,” Stringer said. “Revenue that the city should ensure goes toward public transit isn’t being accounted for by the Department of Finance. That’s wrong, plain and simple.
"Updating our aging transit system and improving services depend, in part, on the city getting this process right.”
Of the sample of RPTT returns examined in the audit, said Stringer, 40% were missing one or more key documents required by DOF to be filed, which restricted the agency’s ability to verify whether the appropriate tax owed to the city as part of the property transaction was applied.
The agency, Stringer added, provided unclear guidance to its staff. DOF, according to Stringer, should revise its written procedures for examiners, including specific instructions on how to review RPTT-related documents. In addition, he said, the department should adequately train agency staff to ensure that documents related to the RPTT and RET are reviewed and processed thoroughly.
DOF, in a statement, called Stringer’s report flawed.
“The comptroller’s office only looked at the examination process when returns are first filed and when DOF is required by law to accept all returns that are completed, signed and notarized but not at our audit program,” the department said.
The state-run MTA, which operates mass transit in the New York City region, is one of the largest municipal issuers with roughly $44 billion in debt, including special credits.
The MTA’s board last week approved a $51.5 billion
The authority, meanwhile, is looking at outyear operating deficits that could spike to $1 billion by 2023. The MTA operates on a calendar year.
