UPDATE! STAR PROPERTY TAX REBATE PROGRAM

If you follow my blog at all, you likely saw my recent article in which I discussed upcoming changes to New York’s STAR property tax rebate program that would directly or indirectly affect millions of property owners. When I wrote about this topic in March, details regarding the proposed changes were still up in the air. About the only thing for certain that was known was that eligible property owners who qualify for the STAR program would have to re-register. No time frame was provided for re-registration, nor was any mechanism for doing so communicated to the public when the initial press release was issued.

The legislature’s purported impetus behind requiring all property owners to re-register for the program was a down state investigation that revealed a seemingly systemic abuse of the program. The investigation suggested that ineligible properties, such as rentals, were being registered under the program, thereby costing New York State millions in property tax revenue annually. To stem this abuse, the legislature proposed as part of its recently passed budget that all property owners re-register for STAR status, regardless of when they last applied.

After posting that article, given how little publicity surrounded the legislature’s intentions regarding STAR, I received several communications from readers questioning whether I was mistaken and/or were these changes were really going forward. The reality is, they are! More importantly, we finally have some details provided by NYS that address the upcoming changes. My appreciation goes out to those readers who brought the updated information to my attention.

According to the New York State’s Department of Taxation and Finance (Department), all homeowners seeking to maintain a basic STAR exemption will need to register (or re-register if you already have) with the Department of Taxation and Finance to receive a STAR exemption in 2014 and thereafter. Homeowners, however, will not need to re-register to receive their 2013 STAR exemption. Although the Department indicates that it will mail all basic STAR recipients information on when and how to register for 2014 and on, I’d still recommend staying on top of matters and possibly even contacting your local tax assessor to ensure you understand the required process to avoid missing out.

On a positive note, the legislation indicates that these changes will not affect senior citizens who are eligible for the enhanced STAR program. Seniors, however, must continue to apply annually to maintain registration or participate in the Income Verification Program.

As a remedial measure to prevent against further abuses of the STAR program in the future, the legislature also implemented heightened penalties for those ineligible for the program that nonetheless apply for same. Under the new rules, penalties for intentionally providing misinformation to an assessor will increase from $100 to as much as $2,500, while the number of years for which a taxpayer must repay inappropriate STAR benefits will increase from three to as many as six years. Also, not only will taxpayers whose STAR exemption is revoked will be unable to receive the exemption for six years after the revocation, but an additional $500 processing fee will be imposed whenever an inappropriate exemption granted after April 1, 2013 is revoked. Perhaps these new rules will discourage ne’re-do-wells from abusing the system.