The Mayor’s Management Report for Fiscal Year 2024 (FY24) provides a detailed overview of the Department of Finance’s (DOF) performance, particularly in property tax collection and customer service. Here are some key insights and notable trends for this year.
The report indicates a slight decline in property tax compliance and on-time payments in FY24. The percentage of property taxes billed and paid dropped by 10 basis points (bps) from FY23 (97.8%) to FY24 (97.7%), making it the lowest in the five-year period from FY20 to FY24. This rate also fell just short of the FY24 target of 98.0%.
Similarly, the percentage of property taxes paid on time decreased by 30 bps, from 94.7% in FY23 to 94.4% in FY24. This metric also represents the lowest rate in the past five years. While the decrease is minor, it signals an area that the DOF might need to address to maintain compliance levels.
Audit Turnaround and Revenue
In FY24, the Tax Audit & Enforcement Division continued to perform well despite facing significant staff retention challenges. The DOF brought on many new auditors, with 94 percent of non-field auditors being new to the unit. To manage this influx of new staff effectively, the DOF assigned new auditors to less-complex cases, allowing more experienced auditors to handle the complex cases.
As a result, audit turnaround times improved slightly. The average time to complete field audits decreased by 2%, from 528 days in FY23 to 519 days in FY24. Non-field audits saw a 4% reduction in turnaround times, dropping from 197 days in FY23 to 190 days in FY24.
A significant highlight from the report is the increase in tax liability as a result of non-field audits. In FY24, there was a 15% increase, marking the highest in the five-year period and indicating enhanced efficiency in identifying additional tax revenue. However, the average amount collected from a closed audit decreased by 15%, primarily due to the resolution of an unusually large case (about $450 million) in FY23 that had previously inflated the average.
Property Tax Refunds
One area of concern highlighted in the report is the increased time taken to issue property tax refunds. DOF processed 20,172 property tax refunds in FY24, an 8% decrease from the prior fiscal year’s total of 21,939. The average time to issue a property tax refund nearly doubled, from 13 days in FY23 to 25 days in FY24, the highest over the five-year period, and significantly above the target of 20 days.
This increase was primarily due to a surge of fraudulent electronic property refund applications. Over 800 suspicious refund claims totaling over $3 million were filed in late 2023 and early 2024, prompting the agency to add additional steps to the review process to safeguard taxpayer dollars. The enhanced review process resulted in longer processing times, especially for claims that required further review or additional documentation from the filer. DOF expects this increase in turnaround time to be temporary as staff become more proficient in the new process, which is critical to protecting property owners against fraud.
Customer Service Performance
The DOF’s customer service metrics in FY24 reveal mixed results. The percentage of emails responded to within 14 days dropped by 900 bps from 60% in FY23 to 51% in FY24, marking the lowest rate in the five-year period. This performance fell well short of the target of 85%, indicating a need for improvements in handling email inquiries.
In contrast, the percentage of letters responded to within 14 days saw an increase of 1,200 bps, from 56% in FY23 to 68% in FY24. Despite this improvement, it still did not meet the target of 85%.
The average customer in-person wait time improved, decreasing by approximately 33.3%, from 21 minutes in FY23 to 14 minutes in FY24, coming close to the target of 12 minutes. This reduction suggests that the DOF has been successful in enhancing in-person customer service efficiency.
Finally, the percentage of calls answered by a Collections customer service representative saw a slight increase of 200 bps, from 30% in FY23 to 32% in FY24. While this is an improvement, there remains room for further enhancement in this area to ensure better customer support.
Conclusion
The Mayor’s Management Report for FY24 provides valuable insights into the Department of Finance’s performance in property tax compliance, audit efficiency, and customer service. Despite facing staff retention challenges and dealing with a surge in fraudulent refund claims, the DOF made strides in improving audit turnaround times and enhancing tax liability identification. However, challenges remain in meeting targets for prompt responses to inquiries and reducing the processing time for property tax refunds.
As the DOF continues to refine its processes and implement measures to improve efficiency and security, these metrics will be crucial for assessing the department’s ongoing efforts to manage New York City’s property tax system effectively.
