STAR Assessor's Guide
Table of Contents
- Property Use
- Enhanced Exemption: Age
- Enhanced Exemption: Income
- Basic Exemption: Income
- Appendix A: Administering STAR in Manufactured Housing Communities
- Appendix B: Administering STAR in Cooperative Apartments
- Appendix C: Correction of Errors and STAR
THE STAR EXEMPTION
The School Tax Relief (STAR) exemption (Real Property Tax Law Section 425) provides a partial exemption from school taxes for most owner-occupied, primary residences. It was signed it into law on August 7, 1997.
There are 2 types of STAR exemptions. A taxpayer may have either a Basic or Enhanced STAR exemption, NOT both: (1) a "Basic" exemption is available to virtually all New Yorkers who own their own one, two, or three family home, condominium, cooperative apartment or mobile home; and (2) an "Enhanced" exemption available to senior citizens (age 65 and older) with a limited income, increased annually according to a cost-of-living adjustment (COLA).
To receive the STAR exemption, taxpayers must file an application with their local assessor. Property owners who are granted the Basic exemption generally do not need to reapply in subsequent years. However, property owners will need to notify their assessor if their primary residence changes. Property owners who receive the Enhanced STAR exemption have the option of participating in a new income verification program. Seniors who are applying for Enhanced STAR may authorize the assessor to have their incomes verified in subsequent years by the State Department of Taxation and Finance (DTF). Seniors who choose this option must furnish their taxpayer identification numbers at that time. The assessor will submit the list of numbers to the Office of Real Porperty Tax Services (ORPTS), along with other identifying information as well to facilitate matching and reporting back (e.g., names of owners and owner's spouses who reside on the premises, parcel ID numbers). ORPTS will then pass this information along to DTF. After checking its records, DTF will notify ORPTS which applicants satisfy the income requirements and which do not (it will not disclose their actual incomes), and ORPTS will forward that information to the appropriate assessors. Most seniors who choose this option will no longer need to re-apply thereafter or furnish tax returns to their local assessors (unless DTF should be unable to verify their returns).
The STAR income verification option does not directly affect seniors who are receiving the Senior Citizens Exemption (RPTL §467). Such persons will still have to reapply for the RPTL §467 exemption annually, and provide income documentation therewith, if they wish to continue receiving that exemption. Of course, as long as they qualify for the RPTL §467 exemption, they will automatically qualify for the Enhanced STAR exemption, so they will not need to submit separate STAR applications in those cases.
Seniors who do not wish to participate in the income verification program for any reason will not be obliged to do so. But if they wish to continue receiving the Enhanced STAR exemption, they will have to keep reapplying, with copies of their tax returns, year after year, just as they have been doing. The main difference, as far as they are concerned, is that the assessor will be obliged to send them an application form every year, with a reminder that they must reapply by taxable status date. If a senior who initially decided to opt-out of the income verification program later decides he or she would like to opt in, he or she will be permitted to do so.
Senior citizens eligible for the Enhanced STAR exemption may request that the assessor send a notice to an adult third party to assist the senior citizen in fulfilling the eligibility requirements regarding that exemption.
Although New York State law includes over 200 real property tax exemptions, STAR is unique in two ways. First, it is the only exemption that is funded by the State. All other exemptions erode the local tax base and shift the incidence of the tax burden (by increasing the tax rate) to those not enjoying that exemption. Second, STAR is unique in its scope. Whereas other exemption programs have targeted sometimes significant numbers of owners (e.g., nearly 563,000 veterans exemptions (RPTL§§ 458, 458-a, 458-b) and over 217,000 senior citizens exemptions (RPTL §467) were granted on 2012 assessment rolls statewide), none has come close to the overwhelming breadth of the STAR program (nearly 3.3 million exemptions).
Not surprisingly, a program of this magnitude has generated numerous questions to which ORPTS has responded in Question and Answer (Q&A) memoranda, more extensive memos on certain subjects (e.g., program administration in manufactured housing communities, correction of error procedures), and formal Opinions of Counsel. The purpose of this Assessor's Guide is to capture that material in a single document that will respond to the most frequently asked questions concerning STAR. Further questions may be directed to the local ORPTS Regional Office, or to the STAR Unit at (518) 474-2819.
- Question: What type of property may receive a STAR exemption?
Answer: A one, two or three family residence, a farm dwelling, residential property held in condominium or cooperative form of ownership, or a mobile home. Of course, the eligibility requirements (i.e., ownership and primary residency, and in the case of the Enhanced exemption, age and income) must also be satisfied.
- Question: May a commercial property that contains a residence (e.g., a ground level store with the owner's living quarters upstairs) receive a STAR exemption?
Answer: Yes. As a result of an amendment enacted in 2000, the STAR exemption can be granted to a portion of a "mixed-use" property that serves as the primary residence of the owner although the property is not primarily residential in character. For example, STAR may be granted to a two-story commercially-zoned building consisting of a ground level and the owner's living quarters upstairs. The exemption in these cases may not exceed the assessed value attributable to the owner's residence, so if the residential portion is worth less than the applicable STAR exemption, the excess exemption may not be applied to the remainder. (Note that where the property is of the type that has always been eligible for STAR i.e., a one, two or three family residence, a residential cooperative or condominium or a farm dwelling, or a mobile home the full exemption should be applied, without proration.)
- Question: A mobile home, located in a mobile home park, is owned by someone who is eligible for a STAR exemption. However, the taxable value of the mobile home is less than the maximum STAR exemption. Is the full exemption granted?
Answer: No. The STAR exemption may not exceed the value of the mobile home.
- Question: May a mobile home located on land owned by another (such as a mobile home park) receive a STAR exemption, and, if so, how is the exemption administered?
Answer: Yes, residential mobile homes qualify whether or not their owners also own the land on which they are located. If the mobile home is only entitled to a STAR exemption, its value will continue to be included in the assessment of the land. The assessor must provide the land owner with a statement showing which mobile homes have received the exemption and the amount of each such exemption, and the land owner must pass along the tax savings to the those mobile home owners through a rent rebate. For a detailed discussion of the administration of the STAR exemption in mobile home parks (also known as manufactured housing communities), see Appendix A.
- Question: If a tenant in a mobile home park is entitled to a rent rebate, by what date must the landlord refund the STAR savings?
Answer: The park owner may (1) credit the tax savings against the monthly rent in 12 installments beginning with the first monthly rental payment due 60 days after the penalty-free period for the payment of taxes and continuing for 11 months, OR (2) credit the total reduction against the first month's rent, with any balance credited against the following month(s)' rent(s) until exhausted, OR (3) pay the total reduction to the tenant within 60 days of the interest-free collection period. For a more detailed treatment regarding STAR and mobile homes, please refer to "Appendix A: Administering STAR in Manufactured Housing Communities." The New York State Division of Housing and Community Renewal [telephone number: (800) 432-4210] is responsible for enforcing the laws concerning the right of tenants of manufactured housing communities.
- Question: The owner of a mobile home park lives in a mobile home that is located in the park. The park is classified as a commercial property. Is the park owner eligible for a STAR exemption on his/her own mobile home?
Answer: Yes. STAR provides that mobile homes are eligible for STAR exemptions. No ownership exceptions are mentioned. Thus, trailers and mobile homes are eligible for STAR even though they may be part of a commercial parcel. This, of course, assumes that the owners meet all other eligibility requirements.
- Question: Is a mobile home located on the land of its owner treated any differently than a parcel containing a conventional home?
- Question: Must a copy of the deed be submitted with the STAR application?
Answer: No, a copy of the deed is not generally required. The assessor must be satisfied, however, that the applicant is the owner. In most cases, it should be sufficient to check the tax records.
- Question: If property is owned by a corporation or partnership and the principals of the corporation or partnership meet the eligibility requirements for STAR, may it be granted?
Answer: If the property is not a farm dwelling, the answer is no. The central requirement for the STAR exemption is that the property is "a one, two, or three family residence" or certain other property, and that it is the "primary residence of the owner." The term "residence" in this context contemplates that the owner is an individual. Where title to property is in the name of a corporation, the exemption may not be granted (see 3 Op.Counsel SBEA No.54).
However, if the property is a farm dwelling, which is held in the name of a business corporation or partnership, it may be eligible for the STAR exemption, provided such dwelling serves as the primary residence of a shareholder or one of the partners.
Also, a dwelling owned by a limited partnership is eligible for this exemption if the property serves as the primary residence of one or more of the partners, provided that the limited partnership does not engage in any commercial activity, and that the partnership was lawfully created to hold title solely for estate planning and protection purposes. Furthermore, the partner or partners residing on the property must personally pay all real property taxes and other costs associated with the property's ownership. However, property owned by a limited liability company is not eligible for the STAR exemption.
- Question: A resident of a cooperative apartment owns shares of stock in the corporation which owns the building in which the apartment is located. May the resident of the cooperative apartment receive a STAR exemption?
Answer: Though cooperative apartments are not separately assessed, STAR specifically makes them eligible for the exemption. If granted, the exemption will be granted to the cooperative apartment building, in an amount determined in accordance with the statutory formula. The assessor must provide the building manager with a statement showing which apartments have received the exemption and the amount of each such exemption, and the manager must pass along the tax savings to the residents of those apartments. See Appendix B for a more detailed discussion of these procedures.
- Question: Do owners of cooperative apartments have to provide a stock certificate to the assessor when applying for STAR?
Answer: Yes, if requested by the assessor.
- Question: Are co-op shareholders in Mitchell-Lama Housing eligible under the STAR Program?
Answer: Yes, such shareholders are eligible to receive benefits, but as Mitchell-Lama Housing is generally exempt from real property taxation, the benefits to the shareholders do not appear in the form of reduced assessments (and thus reduced property taxes). Instead, the benefits are STAR-related credits, to be applied against residents' monthly charges. Mitchell-Lama Housing management is responsible for the proper distribution of these credits (see Appendix B -- Administering STAR in Cooperative Apartments).
- Question: How long does someone have to own property to receive the STAR exemption?
Answer: For STAR, the applicant must own the home and apply by taxable status date. STAR has no length of ownership requirement, unlike the senior citizens exemption, which generally requires ownership for 12 consecutive months prior to application.
- Question: If there are three siblings who own a parcel and each of them has a house on the property, are they entitled to three exemptions?
Answer: Yes. If a parcel contains two or more physically separate residences, a STAR exemption may be granted to each residence where each residence is (1) the primary residence of at least one of the owners AND (2) the residence would be eligible for the exemption if it were separately assessed and owned solely by the owners residing therein. However, only one of the STAR exemptions may be applied to the land in such cases.
- Question: Two siblings who are both eligible for the Enhanced STAR exemption own and live in a duplex. May they both get an exemption?
Answer: No. While they must both apply and be eligible, the duplex is a single property and, therefore, only a single exemption may be granted.
- Question: One spouse owns property in Town X while the other spouse owns property in Town Y. One spouse claims residency in Town X and files an application for the property in Town X, while the other spouse claims residency in Town Y and files an application for the property in Town Y. May both properties qualify for the STAR exemption?
Answer: No. A married couple is entitled to a STAR exemption on no more than one residence, unless they are living apart due to legal separation. In other words, if they have two homes, they can receive STAR on only one of them, unless they are legally separated.
- Question: May a person who has less than fee ownership of a property receive STAR?
Answer: Yes, under certain circumstances. For example, a life tenant, a trust beneficiary or a purchaser in possession under an executory contract of sale are all considered to be owners for STAR purposes and may qualify.
- Question: For purposes of the STAR exemption, how are trusts dealt with?
Answer: The ownership of property is split when it is placed in trust: the trustee is the legal owner, the beneficiary is the beneficial owner. However, for STAR purposes, the trust beneficiary is treated as the owner. Thus, if a senior citizen creates a trust and conveys her home to her children as trustees, and the senior remains in the home as the beneficiary of the trust, then for STAR purposes the owner of the home is the senior, not her children.
- Question: Does it matter if the trust is revocable or irrevocable?
Answer: No, it doesn't; both are the same for exemption purposes.
- Question: How is STAR to be administered where property is in a life estate?
Answer: The life tenant is deemed to own the property so STAR eligibility is based on the life tenant's qualifications. A life estate generally is created by a deed. Often ownership is transferred to another party with life use reserved for the prior owner(s) or another party. In other cases, a life estate is expressly granted by one party to another. In either case, in the eyes of law, as long as the holder of the life estate is alive, the property is "owned" by him or her.
- Question: Who may apply for STAR when ownership of a property has been transferred to a child with life use reserved for the parents?
Answer: Until the death of the life tenant, the property is still considered "owned" by that life tenant and he or she would be eligible for the Basic or Enhanced STAR exemption if otherwise eligible.
- Question: A married couple executes a deed transferring their property to their adult daughter. Thereafter, the parents and the daughter execute a separate side agreement or contract which states that the parents shall have the right to occupy the property until their deaths. Are the parents considered "life tenants" eligible for the STAR exemption?
Answer: No. A "life estate," which is an interest in real property, can be conveyed only by means of a document that fulfills all of the requirements and formalities of a deed (see 10 Op.Counsel SBRPS No. 55)
- Question: Is a life lease the same as a life estate?
Answer: No. A life lease is not equivalent to a life estate, and does not transfer ownership to the lessee. The lessor ( the person who owned the property at the time the lease was executed) remains the legal owner of the property, just as a landlord remains the owner of an apartment that is rented to a tenant.
- Question: A person lives in a house under a land contract, but the land contract has never been filed with the county. Is this person eligible for a STAR exemption?
Answer: Yes, A vendee in possession under an executory contract of sale (a/k/a land contract) has been determined to be the owner for purposes of other exemptions (see 1 Op.Counsel SBEA No. 52 and 3 id. No. 52). Recording is not necessary, although it is recommended (see 7 Op.Counsel SBEA No. 24).
- Question: What is the statutory residency requirement?
Answer: STAR requires that the property be the "primary residence" of one or more of its owners. We equate this with "domicile" or "legal residence." A person may have one or more residences, but can have only one "primary residence."
- Question: What is the definition of primary residence?
Answer: There is no single factor or definition that determines primary residence. However, the most important factor is the length of time the person resides on the property. Generally, it can be expected that the person would reside on the property more than six months of the year. Other factors include a person's voting residence, driver's license, filing status for purposes of state income taxes, and other conduct and behavior that provides evidence as to which property the applicant considers to be his or her primary residence.
- Question: Is the assessor required to obtain proof of residency?
Answer: The applicants must certify that the property is their primary residence. The law says that "the assessor may request that proof of residency be submitted with the application." The assessor has a choice between requiring proof of residency to be submitted with all first-time applications or to require proof of residency only in those cases where there is reason to suspect that the property may not be the primary residence. For example, if the mailing address of the owner is different from the property address or the property is a seasonal property, it is reasonable to question whether this is the primary residence.
- Question: What are acceptable forms of proof of residency?
Answer:There is no single document that absolutely establishes primary residency, but the following types of documentation may be considered:
- mailing address and property address match
- driver's license
- NYS Income Tax return
- utility bills or 911 service listing
- voter registration card
- social security statement
- automobile registration
- deed or recent tax bill
- Question: What if the owner is in a nursing home?
Answer: The exemption may be granted despite the fact that the owner lives in a nursing home rather than his or her own home, as long as no one other than a co-owner or a spouse of the owner resides on the premises. The income of the owner in the nursing home must be considered in determining whether the income eligibility requirement is satisfied.
According to Public Health Law, 2801, a "Nursing home" means a facility providing therein nursing care to sick, invalid, infirm, disabled or convalescent persons in addition to lodging and board or health-related service, or any combination of the foregoing, and in addition thereto, providing nursing care and health-related service, or either of them, to persons who are not occupants of the facility.
"Residential health care facility" means a nursing home or a facility providing health-related service.
"Health-related service" means service in a facility or facilities which provide or offer lodging, board and physical care including, but not limited to, the recording of health information, dietary supervision and supervised hygienic services incident to such service.
- Question: A retired person applies for a STAR exemption but also has a homestead exemption in the State of Florida. May this person also be eligible for STAR?
Answer: No. Not as long as he or she is receiving the Florida exemption. To be eligible for STAR, either Basic or Enhanced, the property must be the primary residence of the applicant. We have been advised that the same requirement also applies to the Florida Homestead exemption. Since a person can have only one primary residence, a Florida resident receiving a Homestead exemption in that state cannot have the STAR exemption. However, if the person gives up the Homestead exemption in Florida, he or she may then become eligible for STAR in New York, assuming the requirements are met. However, in 11 Op. of Counsel SBRPS No.18, which pertained to a married couple, it was concluded that New York law does not preclude a married person from qualifying for an alternative veterans exemption and STAR exemption merely because their spouse receives a Florida Homestead tax benefit on the spouse's Florida domicile.
- Question: A married couple purchased a home jointly, but has since divorced. One ex-spouse still lives in the home. The other ex-spouse no longer lives there, but that ex-spouse's name is still on the deed. Is the resident ex-spouse eligible for Basic STAR?
Answer: Yes, if it is the ex-spouse's primary residence. The law says that the property must serve as the primary residence of one or more of the owners. If there are owners who do not live on the property, that does not affect the eligibility of the owners who do live on the property. In this case, the person who lives on the property is eligible for Basic STAR on his or her own. It is not necessary to have the application signed by the owner who does not live on the property.
- Question: Two people, Sara and Jane, are each 50 percent owners of a parcel. Sara is also the full owner of another property and has been granted an Enhanced STAR exemption on that property. Jane lives in the jointly owned property. May she receive the STAR exemption on the jointly owned property?
Answer: Yes, the residency requirement for STAR is that the property must be the primary residence of at least one of the owners. In other words, if the property is the primary residence of Jane, the fact that Sara has a primary residence elsewhere is beside the point. Therefore, the jointly owned property can receive the Enhanced STAR exemption if it is the primary residence of Jane and all other requirements are met. Note that the combined income of Sara and Jane must be taken into account in determining Enhanced STAR eligibility for the jointly owned property.
- Question: What is the age requirement for the Enhanced STAR exemption?
Answer: For purposes of exemptions for the 2016-2017 school year, all of the owners must be at least 65 years of age as of December 31, 2016, except, where property is owned by a married couple or by siblings, in which case only one need be age 65 by that date. For each subsequent school year, the applicable date is advanced by one year (e.g., for the 2017-2018 school year, age is determined as of December 31, 2017; for the 2018-2019 school year, age is determined as of December 31, 2018, and so on).
- Question: Is the assessor required to collect proof of age from applicants for the Enhanced STAR exemption?
Answer: No. The application form requires the applicant to answer a question on the age criterion and to certify that this information is correct. The law is silent on the collection of proof of age, but it is the applicant's burden to demonstrate eligibility for the exemption, so the assessor may request proof of age where he or she finds it necessary.
- Question: A home is owned by parents who are over 65 and a child who is under 65. Are they eligible for the Enhanced STAR exemption?
Answer: No. All owners must be at least 65 (except for the spouse or sibling of an owner who is 65 or older). However, if the child conveys his or her interest to the parents, the parents would then satisfy the age requirement for the Enhanced STAR exemption. Due to the various implications of such a conveyance, applicants who are considering this course of action should be advised to consult with their private attorney. If no change is made, the property may still qualify for the Basic exemption.
- Question: Is the age requirement for Enhanced STAR the same as it is for the senior citizens exemption (RPTL, 467)?
Answer: Not quite. For purposes of the senior citizens exemption, age is determined as of taxable status date, unless a locality has exercised the option to provide the exemption to those who become "65 years of age after the appropriate taxable status date and on or before December 31 of the same year." As noted, for STAR purposes, age is determined as of December 31 of the applicable year; there is no local option to change that date.
- Question: A child who attends public school lives in the home of an applicant for the Enhanced STAR exemption. May the parcel receive the STAR exemption?
Answer: Yes, if the requirements are otherwise satisfied. Although the senior citizens exemption cannot be granted for school tax purposes to property in which a public school-aged child resides (RPTL, 467(2)), this does not apply to the Enhanced or Basic STAR exemption.
- Question: What is the income requirement for the Enhanced STAR exemption?
Answer: The combined income of all of the owners and of any owner's spouse who resides on the premises may not exceed the prescribed limits for the income tax year ending two years prior to the roll year for which application is made, as amended annually according to a cost-of-living adjustment (COLA) determined by the Social Security Administration for the respective income tax year. The Office of Real Property Tax Services is responsible for annually revising and promulgating the eligible income tax limits. (For applications on the 2016 assessment rolls, the eligible income limit for the 2014 income tax year is $84,550.) Income is defined as "adjusted gross income" (AGI) for federal income tax purposes as reported on the applicants' federal or State income tax return for the applicable income tax year, less the "taxable amount" of total distributions from individual retirement accounts or individual retirement annuities, both of which are commonly known as "IRAs." For taxable status dates related to assessment rolls to be completed in 2016, the applicable income tax year is 2014. For subsequent assessment rolls, i.e., 2017 and thereafter, the applicable income tax year, COLA, and applicable increase percentage will be advanced by one year, with the income standard being the previous applicable income standard increased by the new COLA. Therefore applications for this exemption on a 2017 assessment roll must be based on the applicants' 2015 income, application on a 2018 roll must be based on their 2016 income, and so on.
The only exception is that a senior citizen who has a decrease in income due to the death of his or her spouse may use the income tax year immediately subsequent to the income year that would otherwise be used to qualify for Enhanced STAR. To take advantage of this exception, the senior citizen must have filed the later year's income tax return with the IRS and/or DTF, and must have filed a copy of that return or other income documentation with the assessor, on or before the applicable taxable status date. So for example, eligibility for Enhanced STAR on the 2016 roll will in most cases be based on 2014 income, but qualifying widows and widowers may have their eligibility based on their 2015 income, if they file their 2015 income tax return with the IRS and/or DTF and file a copy of their 2015 return or other documentation with the assessor, on or before the taxable status date of the 2016 roll.
- Question: Is the income of a spouse included for STAR purposes if he or she does not live on the property?
Answer: It depends on whether or not the spouse is also an owner. If he or she is an owner, the income is included. Indeed, if the spouse lives on the property, his or her income is included even if he or she is not a co-owner. The income of a non-resident, non-owner spouse, however, is not included.
- Question: Is income eligibility for the Enhanced STAR exemption based on household income?
Answer: No. Income eligibility for STAR is based on the combined income of the owners, and of any owner's spouses who reside on the premises. If anyone is living on the property who is not an owner, or is not the spouse of an owner, his or her income is not to be considered.
- Question: A couple was divorced twenty years ago. One ex-spouse lives alone in the house, but the other ex-spouse is still an owner. Must the nonresident ex-spouse's income be taken into account?
Answer: Yes. STAR requires that the combined income of all owners, as well as the income of an owner's spouse residing on the property, be considered. It does not matter what the relationship is among the owners. (Note that the senior citizens exemption is different in that it allows the exclusion of the income of a spouse or ex-spouse where the spouse or ex-spouse is absent due to divorce, legal separation or abandonment.)
- Question: How does an assessor who is processing Enhanced STAR applications determine if an applicant meets the income standard?
Answer: The following table may be used for identifying line references on 2014 federal and state income tax returns when determining the income for STAR purposes. New York AGI is not the same as federal AGI. If a state return is submitted, be sure to use federal AGI, not state AGI. Note also that line number references are subject to change on future income tax forms.
|Form #||Name of Income Tax Form||Income for STAR purposes|
|IRS Form 1040||"U.S. Individual Income Tax Return"||Line 37 minus line 15b
"adjusted gross income" minus "taxable amount" (of Total IRA distributions)
|IRS Form 1040A||"U.S. Individual Income Tax Return"||Line 21 minus line 11b
"adjusted gross income" minus "taxable amount" (of Total IRA distributions)
|IRS Form 1040EZ||"Income Tax Return for Single and Joint Filers With No Dependents"||Line 4 only
"federal adjusted gross income". No adjustment needed for IRA's
|NYS Form IT-201||"Resident Income Tax Return"
||Line 19 minus line 9
"federal adjusted gross income" minus "taxable amount of IRA distributions".
- The assessor will need to verify income eligibility for the Enhanced STAR:
- in the initial year of a resident owner or owners' application,
- if the owner or owners choose not to participate in the newly enacted STAR Income Verification program, or
- if the owner or owners lose eligibility or fail to reapply after the initial year of Enhanced STAR eligibility, and later wish to reapply. If the owner or owners participate in the STAR Income Verification Program, such owners need to apply with the assessor only in the initial year. Assuming that such participants would otherwise maintain eligibility, their incomes will be verified by the Department of Taxation and Finance in subsequent years, and they will not need to reapply
6. Question: Distributions from individual retirement annuities as well as individual retirement accounts are to be excluded from federal adjusted gross income. Where do distributions from individual retirement annuities appear on the tax forms?
Answer: An individual retirement annuity is another name for an individual retirement account (refer to the chart in Question 5 for the specific line to use). Any amount shown as "taxable amount" of "total pensions and annuities" should not be deducted from the federal adjusted gross income.
7. Question: Which year's tax return is to be submitted with the application for the Enhanced STAR exemption?
Answer: In providing proof of income for purposes of the Enhanced STAR exemption, the applicant must provide a copy of his or her income tax return completed two years preceding the roll year for which application is made. For the 2016 roll year, the applicant must submit copies of his or her income tax return for 2014. However, if the applicant is applying for the Senior Citizens exemption (and if eligible becomes automatically eligible to receive the Enhanced STAR exemption), then the applicant must provide a copy of his or her income tax return for the year immediately preceding the date of application, or, if that form has not yet been filed, the form for the year before such year (see 10 Op. Counsel SBRPS No. 47). Applicants who have experienced a decrease in income, due to the death of a spouse, that would make them eligible for the exemption may use the income tax return from the year immediately preceding the roll year for which application is made. See question number one in this section.
8. Question: An applicant for the Enhanced STAR exemption refuses to provide a copy of an income tax return but is willing to offer an affidavit that his or her income is under the income eligibility standard for that particular year of application (as annually determined and promulgated by ORPTS). Is the person eligible?
Answer: No. The application must be accompanied by a copy of the federal or state income tax return for the applicable income tax year. The assessor needs to review tax returns since they provide a uniform basis on which to make a determination to ensure the STAR program is administered equitably. Without the return, the application would be incomplete and, therefore, the applicant would be ineligible for the Enhanced STAR exemption. However, the application could be used to grant a Basic STAR exemption if the ownership and residency requirements are met. Taxpayers who are reluctant to disclose income information should be informed that such information is confidential under the law (RPTL, 425(4)(b)(iii)).
9. Question: What if there is reason to believe that the applicant has falsified the copy of the tax form? What can the assessor do to obtain more reliable proof?
Answer: It is true that a photocopy of a tax form does not mean that it is the same as the original form filed with the IRS or the Department of Taxation and Finance. If the assessor has reason to believe that something other than a true copy of the tax form has been provided, there are other means of obtaining more reliable information. One such way would be to obtain the necessary information from the IRS or the Department of Taxation and Finance. This can be done by requiring the applicant to complete and file one of the following forms:
IRS Form 4506 "Request for Copy or Transcript of Tax Form" The applicant should be instructed to show the assessor's name and address in item 5 so that the information will be sent directly. Box 8a "Tax return transcript" should be checked to avoid the $23 fee for photocopies.
NYS Department of Taxation and Finance Form DTF-505 "Request for Copy of Filed Tax Return" See the instructions on the back of the form for requesting copies on a taxpayer's behalf. The State form requires an additional notarized statement if the information is requested on behalf of a taxpayer and a 25 cent per page fee.
10. Question: An applicant for the Enhanced STAR exemption has not filed either a state or federal tax return. What must the assessor do to document that the filing of a tax return is not required?
Answer: The application form requires that the applicant submit a copy of the tax return for the tax year ending two years prior to the roll year for which the exemption is being sought (if filed). If the applicant is not required to file a tax return, the applicant must establish, to the assessor's satisfaction, through means other than a tax return, that the applicant's income is equal to or less than the eligible income standard annually determined by ORPS. ORPS has developed a separate form (RP-425-WKST) that may be used by non-filers. However, use of this form by the assessor is optional if another means is used to determine that the applicants are eligible non-filers.
11. Question: What if the applicant refuses to comply with a request for additional income documentation and argues that all of the information which the application requires has already been submitted?
Answer: The certification on the STAR application form includes a statement that reads "I understand that it is my (our) obligation to . . . to provide any documentation of eligibility that is requested." This authorizes the assessor to request information and to withhold the approval of an exemption until the requested documentation has been received and that documentation supports the eligibility of the applicant. If documentation has not been provided by tentative roll preparation time, the assessor should deny the Enhanced STAR exemption (and grant the Basic if warranted); the taxpayer may grieve the denial to the board of assessment review.
- Question: Is there an income limit for the Basic STAR exemption?
Answer: Yes. The Basic STAR exemption will no longer be available on parcels having an annual "affiliated income" of greater than $500,000 (as determined by the Department of Taxation and Finance). Affiliated income means the combined income of all the owners and their spouses who resided on the parcel as of the applicable taxable status date. Income has the same meaning as it does concerning the Enhanced STAR exemption (i.e., federal AGI less taxable IRA distributions-see Q. #5 under Enhanced Exemption: Income). For the 2016-17 school year, the income determinations will be based upon returns for the 2014 income tax year; for the 2017-18 school year, returns from the 2015 income tax year will be so used; and so on.
- Question: The applicant is not a citizen of the United States. May the exemption be granted?
Answer: Yes, if the eligibility requirements are otherwise satisfied. There is no citizenship requirement in the STAR exemption.
- Question: An applicant was unable to file the STAR application on time because of a documented medical emergency. May an exception be made in the same way as for the senior citizens exemption?
Answer: An application for the STAR exemption may be filed with the assessor after the appropriate taxable status date, but not later than the local Grievance day, if the failure to file a timely application resulted from: (1) a death of the applicant's spouse, child, parent, brother or sister; or (2) an illness of the applicant or of the applicant's spouse, child, parent, brother or sister, which actually prevented the applicant from filing on a timely basis, as certified by a licensed physician. The assessor should approve or deny such an application as if it had been filed on or before taxable status date. If the municipality has exercised the local option to grant extensions for the RPTL §467 exemption and the applicant qualifies for and receives that exemption, the person will also get the Enhanced STAR exemption.
- Question: A person had an Enhanced STAR exemption in the past year, but fails to reapply in the following year. May he or she still be given the Basic STAR exemption?
Answer: Yes, in fact, the Basic exemption should be automatically granted under these circumstances, unless the person's primary residence has changed.
- Question: The STAR application requires people to attach a copy of an income tax return and proof of age. Does the assessor have to keep the tax returns and proof of age or can they be returned to the applicant?
Answer: The tax returns are a required part of the application and must be retained. Similarly, if the assessor requires the applicant to submit additional documentation of income, age, or residency, that must also be retained.
- Question: How long must the STAR application and other required documentation be kept?
Answer: Government records may be discarded only as authorized by State Archives and Records Administration. Its retention schedule for municipal records (MU-1: No. 589) indicates that original tax exemption applications and supporting documents are to be retained for six years after the expiration of the exemption. Materials for denied applications should be retained for six years after final determination. Renewal applications are to be kept for six years as well.
- Question: The STAR application form (RP-425 rev.) states that the owners must supply copies of their income tax forms along with an application for an Enhanced STAR exemption. Just what does this mean? For example, must an applicant supply both sides of a federal 1040 form since the income information is on one side of the form and the signatures are on the other?
Answer: In the case of the forms where the income information and the signatures are not on the same side of the form, copies of both sides of the form must be provided. However, there is no reason to routinely require applicants to provide copies of supporting schedules and documents.
- Question: If someone asks the assessor to see the copy of the tax return for a person who has applied for an Enhanced STAR exemption, must it be provided under the Freedom of Information Law (FOIL)?
Answer: No. In fact, the STAR law specifically requires that any income information submitted with STAR applications shall be kept confidential. The pertinent provision (RPTL, 425(4)(b)(iii)) states:
Any information or documentation submitted by the applicant in connection with applications for or renewal of the exemption authorized under this section to verify income, shall be deemed confidential, and the assessor, any municipal officer or municipal employees are prohibited from disclosing any such information, except for disclosure necessary in the performance of their official duties. Any unauthorized disclosure of such information shall be deemed a violation of section 805-a of the general municipal law.
- Question: If the information on tax forms that are part of a STAR application is confidential, how can an assessor show the tax forms to an auditor from the State Comptroller's Office?
Answer: The STAR program is established in New York law and is fully funded by the State of New York. Thus, the Office of the State Comptroller is responsible for auditing the program and such audits are a component part of STAR administration. Please note that the "confidentiality" section of the STAR legislation referred to in the preceding question provides that "unauthorized" disclosure is a violation of the general municipal law. Release of income information to a State auditor clearly would be an authorized disclosure.
- Question: If a person who has a Basic STAR exemption moves and does not tell the assessor, is there any liability on the part of the assessor?
Answer: The certification on the application includes a statement that it is the applicant's obligation to notify the assessor of a change in primary residence. Clearly, the applicant, and not the assessor, is responsible in this case.
- Question: An individual owns a mobile home located in a mobile home park. The individual, who applies for and is eligible for the STAR Exemption, moves the mobile home out of the mobile home park shortly after the taxable status day. What is the obligation of the mobile home park owner in this situation regarding the STAR Exemption payment?
Answer: Since the value of the mobile home was assessed with the land, the park owner will be liable for the full school tax bill even though the mobile home is no longer there. The park owner is not obliged to forward the STAR tax savings to the mobile home owner under these circumstances.
- Question: If an approved STAR applicant dies after the taxable status date, does the exemption remain on the property?
Answer: Yes, but only for the assessment roll based on that taxable status date. While other exemptions are subject to removal when property is transferred to a non-exempt owner after taxable status date (see, RPTL §520), this does not apply to STAR (see RPTL §520(5)). Any new owner of that property during the year would receive the benefit of such exemption whether it was for the Basic or the Enhanced STAR exemption.
- Question: A couple currently receives the Enhanced STAR exemption. If one spouse dies and the surviving spouse is 63 years of age, does the exemption remain on the property?
Answer: Yes. A surviving spouse may retain the STAR exemption provided he/she is at least 62 years of age as of December 31st of the applicable calendar year.
- Question: A taxpayer submits an application for the STAR exemption and it is approved by the assessor. However, prior to taxable status date, the applicant dies. Does the property receive the exemption?
Answer: No. The condition and ownership of property is determined as of taxable status date.
- Question: An eligible senior citizen purchases a home after taxable status date. May he or she receive a prorated STAR exemption on the home?
Answer: No. There is no provision in the RPTL for prorated STAR exemptions. However, the taxpayer could receive a prorated section 467 exemption. People who receive a Section 467 exemption are automatically eligible for an Enhanced STAR exemption, but the STAR exemption would begin on the school tax roll based on the next taxable status date.
- Question: A person who has been granted an Enhanced STAR exemption sells his or her house, cooperative apartment or mobile home after taxable status date. What happens to the exemption? Also, what happens with regard to a newly-purchased house, cooperative apartment or mobile home that is bought by this person who still meets the eligibility requirements for the Enhanced STAR exemption?
Answer: In the case of the house that has been sold, the exemption remains with the parcel until the next taxable status date. This would occur even if the new owner does not meet the Enhanced STAR eligibility requirements. On the other hand, the person who meets the STAR eligibility requirements and buys a house, etc. after taxable status date must wait until the following year to have the exemption applied to the new property (unless the exemption has been granted to the prior owner).
- Question: A person who has applied for and qualifies for the Section 467 senior citizens exemption automatically qualifies for the Enhanced STAR exemption. What if someone has filled out the STAR application form (RP-425) but meets the income requirement for the section 467 exemption? May the section 467 exemption be awarded?
Answer: Perhaps, but to receive the section 467 exemption, the applicant must complete the RP-467 application form. Section 467 includes additional requirements not applicable to STAR (e.g., the income requirements of the two statutes now differ), so the additional questions on the RP-467 must be answered.
- Question: If a property is sold, must the assessor mail a STAR application to the new owner?
Answer: Yes. When the assessor receives a real property transfer report (RP-5217), he or she must mail a STAR application to the new owners as shown thereon (see 425(11)c)).
- Question: May the assessor make any adjustments to the certified STAR exempt amount?
Answer: No. The certified STAR exempt amount is the base STAR amount multiplied by the equalization rate and multiplied by the county sales price differential. All of the necessary adjustments have been made in the certified amount and it should be used as provided by ORPTS.
- Question: May the certified STAR exempt amount be greater than $30,000 (Basic) or $65,300 (Enhanced, 2015-2016 school year)?
Answer: Yes, in certain cases. In counties where the sales price differential factor is greater than one, the exemption amounts will be adjusted upward. However, an adjustment must also be made for the equalization rate which, very often, will more than offset the sales-based increase. Thus, many certified STAR exempt amounts are well below the maximum basic and enhanced STAR exempt amounts.
- Question: Must an assessor give the applicant notice when a STAR exemption is denied?
Answer: Yes. Whenever a STAR exemption is denied, the assessor must mail a notice to the applicant at least 10 days before Grievance Day, or in New York City, at least 30 days before the final date for filing an assessment appeal. The notice must be on a form prescribed by the State Board and must specify the reason for the denial. Note that while in the case of the senior citizens exemption, a notice of denial need be sent only if the applicant has supplied the assessor with a "self-addressed, pre-paid envelope" (RPTL, 467(6)(a)), under STAR, a notice of denial must be mailed whether or not such an envelope has been provided.
- Question: What is the procedure for appealing the denial of a STAR exemption?
Answer: For assessment review purposes, STAR is handled in the same manner as any other partial exemption. The person complaining should use the RP-524 Form, Part Three, Section B, Subsection b. "The taxable assessed value is excessive because of the denial of all or a portion of a partial exemption."
- Question: What are some of the types of STAR issues that can be argued before the board of assessment review? For example:
- May a board of assessment review accept STAR applications that were filed with the assessor after the deadline (taxable status date)?
- May a board of assessment review reconsider the assessor's determination of income based on tax information filed with the application?
Answer: Initially, it should be noted that it is not a question of "which STAR issues can be argued" before the board of assessment review. Every taxpayer is entitled to his or her "day in court." It is a question of whether the board of assessment review has jurisdiction or authority to determine certain issues. With regard to the above examples:
- The board of assessment review does not have the authority to waive the law regarding filing. This presents a question of law and not a question of fact. The board of assessment review has neither jurisdiction nor discretion regarding such issue.
- The board of assessment review has the authority to decide issues of fact, and the question of income may be one of fact.
- Question: May the assessor correct the assessment roll or tax roll if a STAR exemption was approved but was inadvertently left off the roll, or if the exemption was granted to the wrong parcel?
Answer: Yes. The correction of errors provisions of title 3 of Article 5 of the RPTL may be used to correct certain errors on assessment and tax rolls. For the answer to these specific questions and others concerning the correction of errors procedures, see Appendix D.
- Question: What are the penalties for making a "material misstatement" on a STAR application?
Answer: A penalty tax of $100 or 20% of the improperly received tax savings up to $2500, whichever is greater, is imposed against the property in such cases. In addition, such applicant "shall be disqualified from further exemption pursuant to this section [RPTL, 425] for a period of six years, and may be subject to prosecution pursuant to the penal law."
- Question: An individual claims primary residency in two properties. Should the STAR penalties be imposed on both properties even if one of the properties does, in fact, serve as the applicant's primary residence?
Answer: There is no material misstatement on the application for the individual's primary residence, so the penalty tax doesn't apply thereto. However, assuming that there was a material misstatement on the other application, the applicant would be "disqualified from further exemption pursuant to this section [RPTL, 425] for a period of six years," so the property would not be eligible for STAR on either residence for a period of six years. However, this penalty does not apply if the exemption has been renounced by the individual on one of the two properties (RPTL 496).
- Question: An applicant for Enhanced STAR misrepresents his or her age or income. Can this applicant still receive Basic STAR?
Answer: No. The phrase "disqualified from further exemption pursuant to this section" means neither Enhanced nor Basic STAR may be granted for a five-year period.
- Question: What is the logic used by the NYS Dept. of Taxation & Finance to determine income eligibility for the Enhanced STAR exemption?
Answer: This is the logic used in the program to verify income for the enhanced STAR exemption with the Department of Tax and Finance (DTF):
- DTF checks to see if the taxpayer filed an amended return. If yes, this record automatically receives a "U" since amended tax info is not in a database at DTF.
- DTF looks for a match between the two files, by SSN and first three letters of the last name. If there is no match, record receives a "U".
- If a match is found, DTF then checks to see which tax return was filed.
- If the taxpayer filed form IT-201 or IT-203, Federal Adjusted Gross Income less IRA distributions is used to determine eligibility.
- A temporary table is built to accumulate information for multiple owners; once a match is found, income is added to the table.
- DTF then checks to see if the next parcel ID number is the same. If yes, income is combined to determine eligibility:
e.g., if there are 5 owners, and 2 are "U" but other 3 exceed the income limit, all will receive an "N"
e.g., if there are 5 owners, and 4 incomes combined are under the limit and the 5th is a "U" then all receive a "U".
- If a unit number is entered for the record, DTF will not combine incomes for owners with the same parcel ID number because it indicates a mobile home park or a co-op building.
- DTF also checks to see if a joint return was filed. If so, DTF will not combine the household income twice even though there are two records on the ORPS file with the parcel ID number.