New York City’s “pied-à-terre tax” legal dispute saw a new development on the 13th. Justice Phillip Hom of the New York State Supreme Court Appellate Division, Second Department, signed a temporary order temporarily lifting the injunction issued earlier in the week by a lower court on Monday, August 10th, allowing the city government to proceed with the implementation of the “pied-à-terre tax.” However, this decision is only a temporary measure, as the Appellate Division will continue to review the case, and the legal dispute is far from over.
Justice Wayne Ozzi of the New York State Supreme Court in Staten Island had previously granted a temporary injunction requested by three property owners, suspending certain implementation procedures by the city government. The city government promptly appealed, arguing that under the law, the appeal automatically stays the lower court’s order. According to the latest order issued by the Appellate Division on the 13th, the city government can continue with the tax assessment work at least until further decisions are made.
The “pied-à-terre tax” in New York City was approved by the state government this spring, primarily targeting high-value, non-primary residence properties. The city government stipulated that one to three-family homes valued at least $5 million and condos or co-ops valued at least $1 million, if not primary residences, may be subject to additional taxes.
The main controversy lies in how the New York City Department of Finance determines the taxable entities. The city government previously released a database involving around 900,000 properties and sent notices to approximately 17,000 property owners, informing them that they may be subject to additional taxes if they do not apply for exemptions. However, some property owners discovered that despite long-term residence in the relevant properties, they were still included in the list, leading to questions about the city government’s selection process.
The three property owners subsequently filed a lawsuit, accusing the city government of not fully utilizing data allowed by state law to ascertain which properties qualify as non-primary residences and instead shifting the burden of proof to the property owners, requiring them to prove their exemption eligibility within a deadline.
Judge Ozzi also raised questions about this when issuing the injunction on the 10th. According to court records, he stated that if some property owners are subject to additional taxes simply for not submitting exemption applications, this practice is not appropriate. He also questioned whether the city government had completed the necessary verifications required by law before sending out notices.
Randy Mastro, a former First Deputy Mayor representing the three plaintiffs, criticized the current city government in documents filed on the 13th, stating that the authorities were unwilling to acknowledge issues with the implementation process and instead sought court permission to continue issuing notices to property owners who actually consider New York their primary residence.
The city government argued that suspending the implementation could lead to administrative and tax procedural confusion, as the state law has set specific timelines and deadlines. City legal adviser Steve Banks pointed out that the injunction could impact the city government’s ability to generate revenue to address its fiscal shortfall.
As of now, the Appellate Division’s order on the 13th only temporarily restores the city government’s authority to proceed with the “pied-à-terre tax” and does not rule on the tax system itself or the legality of the city government’s implementation methods.