New York City is making changes to income and expense annual reporting - by Peter Blond

While much of life continues to be a forced “new normal,” some things never change. The annual New York City requirement of reporting your prior year income and expenses contains a new poison pill; full rent roll data (including both commercial and residential units) must now be provided online by June 1^st, 2021. The requirement applies to every city building assessed for a surprisingly low $750,000 or more based on each property’s new 2021/22 actual assessment. The sudden city urgency is particularly interesting considering the Feds have given everyone an extension on their 2020 return until May 17^th.

Most importantly, the new requirement is incredibly onerous insofar as you have no option other than to hand-enter the data on the New York City Department of Finance’s (DOF) version. You read that correctly, as the burden is now on the taxpayer not only to supply the data, but it must be done in the city’s format. In other words, you may no longer just upload your ordinarily maintained rent roll. For buildings with many units, this will prove a voluminous task at a time where landlords are scrambling just to keep and hopefully acquire tenants of all categories with reduced staffs.

As has been the city’s shrewd approach for many years, they have again passed their data processing costs back to the taxpayer by converting you into their free labor pool. As an example, years ago, you simply had to mail in your RPIE (Real Property Income & Expense). The City Department of Finance was then obligated to outsource the data entry project causing delays and from time to time, questionable data. None of those things are good for the city’s pockets.

Around 2007, the city started compelling taxpayers to enter their RPIE data into DOF’s chosen format. In recent years, the city made aggressive rule changes such as moving the original RPIE deadline from September 1^st to June 1^st. This seemingly insignificant three-month change was of enormous importance to DOF and the city’s pocketbook. By expediting the former processing and providing three extra months to analyze the data, the city had enabled its assessors to tax further into the future than was ever possible previously.

In theory, the city will now have a usable and current rent roll database immediately as opposed to waiting many months for an outside contractor to compile the various rent roll submissions from tens of thousands of taxpayers. The storefront registry requirement is yet another hound in the city’s new cyber-tax watchdog arsenal. Many properties are essentially filing the same information over and over again. Will this cause confusion for taxpayers in addition to the city’s modeling computer? Hopefully the partially redundant filings won’t end up being double counted against any properties merely attempting to comply with these never ending new requirements, formats and rules.

As the saying goes, timing is indeed everything. The City Department of Finance will now be able to pummel properties in 2022/23 that unexpectedly outperformed the pandemic. Distressed properties may now receive smaller or no pre-emptive reductions based on a new rent roll projection that may or may not come to collection fruition in 2021. Clearly, the city has positioned itself to never be on the short end of receiving their share of both collections and new projections.

Making matters all the more disturbing, failure to file any portion of your RPIE-20 will result in significant fines and the likely loss of New York City Tax Commission assessment review privileges the following calendar year. It appears Albany and the City Council remain hell-bent on their persecution of landlords at a time when many are questioning their continued commitment to what will now become the highest taxed jurisdiction in the country.

While many taxpayers are waiting to see if their promised reduced real estate tax bill projections from January are real or just another mirage, the real question may be what happens to them next January. If your property received a large actual assessment reduction on the 2021/22 assessment roll, but your arms-length rental income did not decline in similar fashion, it is likely the city will be increasing your assessment substantially in January 2022. Any increases will be theoretically intended to make-up for the loss of transitional increases over the next several tax years. Make certain you file your RPIE-20 by June 1^st, 2021 along with any related requirements.

Peter Blond, Esq. is a partner at Brandt, Steinberg, Lewis & Blond LLP and the immediate past chair of the NYC Bar committee on condemnation & tax certiorari, New York, N.Y.