Tax Abuse

Erie County prosecutors say property owners received about $1.1 million last year in state tax rebates for more than 1,800 rental properties in 39 municipalities that were ineligible under the Basic STAR program.

District Attorney Frank Clark and James Quinn Auricchio, head of his new Revenue Crimes Bureau, said Buffalo officials helped them uncover what they called abuse of the program. Owners who took advantage of the state's poorly worded application form are unlikely to face prosecution, but they are working with state tax officials to see how money can be recovered.

Under state law, municipalities are reimbursed through the Basic School Tax Relief Program for revenue lost from eligible residential properties that are owner-occupied and whose owners apply for the tax exemption.
The prosecutors said their six-month investigation found properties that were not owner-occupied and still received both reduced tax rates and rebate checks in 2006. "In many cases, homeowners, including one who lives in California, received relief for more than one home" in Erie County, Clark said.

State Budget Department data show the average STAR savings for upstate New York property owners was $640 last year. Based on the "preliminary numbers" for Erie County, the problem from all of New York's 64 counties could be costing state government many millions of dollars.

Thomas Bergin, spokesman for the state Department of Taxation and Finance, said they look forward to working with Erie County officials to correct the problem. His department issues checks based on information provided by municipalities, he said, and new application forms in August will require Social Security numbers for cross-checking.