Higher taxes, harsher penalties: Financial disclosures and new fund in Nassau County - by Brad and Sean Cronin

Sean Cronin, Cronin &
Cronin Law Firm, PLLC

Brad Cronin, Cronin &
Cronin Law Firm, PLLC

Rising property taxes and harsh new penalties have rightly drawn a great deal of scrutiny in Nassau County in recent months. The shock of receiving January tax bills at extraordinary amounts far in excess of prior years has raised concerns among property owners, politicians and even media outlets. Missing from the analysis is the impact of the local budgets on both the commercial and residential taxpayer. As one commercial property owner stated succinctly, the problem is not the assessment, it is the aggregate amount of taxes. Even if all assessments were accurate, the tax burden would still threaten to strangle the region, with serious long term ramifications.

To make matters worse, Nassau County is attempting to keep in place outrageous penalties on the already overtaxed commercial property owner; this is a transparent attempt to pad government coffers, unhinged from any economic reality. The county mailed out notices in December to property owners whom they claim have not adequately complied with annual filing requirements related to income and expense disclosures. This disclosure obligation is pursuant to a local law and is required regardless of whether an owner is challenging his taxes. In fact, many owners have submitted this information as part of their certiorari case, unaware that the new local law required them to also submit these statements online to the county.

Even worse, many property owners have received penalties even though they have complied with the law. These owners should make sure they bring forth evidence of their compliance and supply it to Nassau County in order to eliminate these erroneous penalties, which have no merit.

The legality of the penalty is being challenged in court. A temporary restraining order has been signed preventing the county from imposing these penalties for a period of time, but the validity of the law and resulting penalties remains to be decided. Should the court decide these penalties are valid, property owners will be forced to pay these egregious amounts or see the penalty appear on their tax bill in the form of tax lien.

These penalties are so severe that they were at one time estimated in the county budget to bring in as much as $36 million in additional revenue. For a county that traditionally ranks at or near the top of property tax burdens in the entire country, the added penalty has disenchanted property owners to the point where many are beginning to look elsewhere for future investments.

While the penalty law is being challenged on its face, in order to reduce the increased tax burden, owners must file a grievance since the penalty is based upon the market value of the property.  Higher taxes and penalties drive down the value of real estate and the value of the property must be reconsidered in light of these new expenses. With tax rates at increased levels and potential penalties pressuring profit margins and threatening local investment and job creation, obtaining the maximum reduction is more critical than ever. Property owners have the right to be made whole with refunds for overpayment. But it is equally important that the property’s assessment be set at the correct assessed value going forward so future tax burdens can be minimized.

Nassau County has also set up essentially a taxpayer “bank account” for Nassau called the disputed assessment fund. The disputed assessment fund essentially removes a portion of an owner’s tax payment from where it normally would go (e.g. school, town or county budgets), and deposits that amount in a separate account. That account is then used to refund successful property tax grievances. The problem is this: the budgets that were supposed to receive the money end up with a shortfall equal to the amount that is removed to the separate account or the “fund” as labeled by the County. In order to make up for this shortfall, municipalities have raised their tax rates, many by double digit percentages, to fill the gap.

Nassau County believes that this is a long term solution, but the real result is another blow to both commercial owners and to Nassau County’s future prosperity. Nassau should be working with commercial property owners to broaden the tax base by encouraging construction and modernizing properties instead of discouraging frustrating owners. Does anyone truly believe that constantly raising taxes would be a good thing for the region?  Assessments have to be adjusted with changing market conditions and owners have rights to redress. Taxpayers understand this, but raising revenue in the form of improper penalties and reserve funds on the backs of property owners is the real problem.

Brad Cronin, Esq., and Sean Cronin, Esq., are partners at Cronin & Cronin Law Firm, PLLC, Mineola, N.Y.