A former finance commissioner for New York City has filed a lawsuit challenging the city's new pied-à-terre tax, arguing that it unfairly places the burden of proof on homeowners to demonstrate they are not liable for the tax. Martha Stark, policy director for Tax Equity Now New York (TENNY) and a former tax chief under Mayor Michael Bloomberg, is backing the suit brought by three homeowners seeking to halt the controversial tax.
The lawsuit, filed in Staten Island Supreme Court, claims that the city is forcing property owners to navigate complex procedures to prove they reside in their homes full-time, a requirement to avoid the tax for second-home owners. The plaintiffs are demanding that the court declare the city's actions illegal and remove a list of approximately 900,000 properties released by the Department of Finance in July from its website.
According to Stark's expert testimony included in the lawsuit, only about 2.5% of the nearly one million properties on the list, specifically 24,218, met the statutory value threshold for the tax. This threshold applies to one- to three-family homes valued at $5 million or more, and condominiums and cooperative apartments valued at $1 million or more.
Stark stated that the release of this list caused significant confusion among property owners who feared they might be subject to the surcharge even when it did not apply to them. The city had previously mailed warning letters to around 17,000 property owners identified as potentially eligible. However, Stark noted that only 5,000 to 6,000 of these properties were ultimately determined to be non-primary residences subject to the tax, leaving 11,000 to 12,000 homeowners with the task of proving their primary residency.
The lawsuit suggests that the city could have utilized existing records, such as tax returns and STAR exemptions, to more accurately identify primary residences instead of relying on what it calls "opaque and unverified unit-value allocations."
Stark has been a proponent of property tax reform in New York for nearly four decades. She was previously involved in a 2017 lawsuit that challenged the city's property tax assessment system, arguing that the existing laws and their implementation violated constitutional protections and state and federal laws, including the Equal Protection and Due Process clauses of the New York and U.S. constitutions, the state's Real Property Tax Law, and the federal Fair Housing Act.