Farmingville, NY - As Receiver of Taxes in Brookhaven Township my staff and I are often asked by taxpayers to explain the various tax exemptions they may qualify for in an effort to reduce their property tax burden. While it’s true my office does not administer nor qualify residents for these tax exemptions, the phone number on the tax bill still rings in my office and my staff and I are more than happy to advise and assist residents with a question concerning their bill. As an elected official, my standing policy has always been about providing full government transparency and providing outstanding constituent service. I have never shied away from providing information, guidance and advice to our residents and it is in this advisory capacity that I write this Op Ed today.
The recently passed budget included a provision inserted by Governor Cuomo that has the potential for significant tax ramifications for Brookhaven Town property owners.
Since its inception, the STAR rebate program has been administered locally by the Town Tax Assessors office. That changed in 2015 when all new home purchases required an application for the STAR exemption through the New York State Department of Finance. Furthermore, the STAR savings would no longer appear as a credit on the property tax bill but rather as a mailed check directly to taxpayers each October. The changes in 2019 however should be of particular interest to those taxpayers who receive the STAR Enhanced property tax exemption.
STAR Enhanced is an income-based exemption, worth thousands of dollars to the many senior citizens who receive it. In many cases, this credit is a major factor their ability to afford to stay in the home .
The Governor has now modified the program to allow residents to receive their STAR Enhanced as a direct payment from NYS in lieu of the credit on the bill. The Governor says that the change is needed to improve efficiency and reduce the cost of administration. So, to entice taxpayers, the Governor is offering an additional 2% each year on top of the existing rebate for taxpayers that switch to check. This additional 2% averages about $46.00 a year. But the STAR tax credit has worked well in the past, why the change?
Issuing checks benefit the State for several reasons: part efficiency, part bookkeeping….part politics?
In the old system, schools gave homeowners the STAR savings and were then reimbursed by the state — which appears as a budget expense for the state. With the new system NYS gives the savings directly to the homeowners in a check payment. That means the state can count the checks as a "personal income tax credit," allowing it to count the checks as a reduction in tax revenue, and not as state spending. This ‘reduction in expenses’ is an important accounting distinction as it allows for the Governor’s budget to more easily stay within his self-imposed 2% tax cap.
As it relates to the income-based STAR Enhanced exemption, a very important question needs to be asked: will seniors who opt-in and receive the check have that payment classified as income and therefore subject to both NYS and Federal income tax? Furthermore, will residents receiving STAR Enhanced who are close to the income limit actually lose the exemption based on this new income?
I believe these open questions need to be clarified before anyone makes the switch. Therefore, I am cautioning Town of Brookhaven residents currently receiving STAR and more specifically, STAR Enhanced, to consult with their tax professional for advice given their unique situation. No need to jump in, the program allows for open enrollment at ANYTIME there is no deadline. Please carefully consider your options, the financial stakes are too high to risk the loss of such a valuable exemption.
Respectfully,
Louis J. Marcoccia
Brookhaven Town Receiver of Taxes
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Division of Public Information * Office of the Supervisor
One Independence Hill • Farmingville • NY 11738 • Phone 631-451-6595