Property Tax Rebate? Don’t Spend It All Just Yet, NJ Comptroller Says
It is no secret that New Jersey is home to some of the highest property taxes in the nation. But an investigation by the state comptroller has found the state can potentially save millions of dollars annually for its property tax relief programs by fixing a blind spot in the sharing of data that is already being collected by local officials.
Thousands of homeowners have received larger property tax credits than they were entitled to, according to the report. The data shows that they inaccurately claimed to occupy 100 percent of a multi-unit property when applying for the Homestead Property Tax Credit program, the Property Tax Reimbursement program and the state Property Tax Deduction.
Following recommendations from the report, the Office of the State Comptroller has asked the state Division of Taxation to require local tax assessors to report information regarding the number of dwelling units for each property in their municipality. The data is already being collected by local tax assessors and can easily be included with property information currently being reported to the state.
"Our report identifies a gap in the oversight of property tax relief programs and it offers a clear solution for closing that gap," said Acting State Comptroller Marc Larkins. "Property owners were applying for and receiving a 100 percent credit when, in fact, they should've received a credit proportional to the amount of the property they use as their principle residence."
In response to the investigation, the Division of Taxation already has sent letters seeking adjustments from 3,771 taxpayers who received a full rebate from the Homestead Property Tax Credit program even though their properties were designated as multi-unit. The state anticipates recovering more than $1.6 million from that effort.
It also has been recommended that the Division of Taxation attempt to identify all other property owners who improperly received a 100 percent credit from the Homestead Property Tax Credit, Property Tax Reimbursement and stat Property Tax Deduction programs. More than $1 billion has been budgeted for the three programs in Fiscal Year 2015 and it is estimated that such a review could potentially save the state millions of additional dollars. The amount of rebates and credits for all three programs are adjusted downward when eligible homeowners do not occupy 100 percent of a multi-unit property.
The investigation began following a tip from the general public in which it was alleged that eight homeowners in Kearny were receiving a larger homestead credit than they were otherwise entitled to because a portion of their residence was occupied by other tenants. Investigators determined that seven of the eight homeowners had, in fact, received overpayments totaling $2,897. In order to look into whether the overpayments were occurring on a statewide basis, OSC collaborated with the Division of Taxation to identify properties whose owners received 100 percent of the homestead credit. The search yielded 65,000 addresses.
From that list, it was revealed that 29 of them received $9,000 more in rebates than they were entitled to. On average, the homeowners received a rebate that was 55 percent higher than the amount they were entitled to receive. From that group, four homeowners also received excessive property tax reimbursements totaling more than $1,500 and 12 homeowners claimed excess property tax deductions totaling more than $48,000.
"The state can save millions of dollars a year by requiring local tax assessors to report already known information. We look forward to continuing to work with the state Division of Taxation to ensure that dollars set aside for property tax relief are spent appropriately and as the law intended," Larkins said.
Members of the public can report information regarding waste, fraud or misconduct to OSC's toll-free hotline, 1-855-OSC-TIPS, or to firstname.lastname@example.org.