NYC property owners: RPIE filing deadline is June 2 - non-compliance carries steep penalties - by Peter Blond

If you’re a New York City real estate owner, the only thing more annoying than your allergies may be the legally mandatory RPIE (Real Property Income & Expense) filing that is due no later than June 2^nd this year. The RPIE is required annually because NYC utilizes an income and expense approach to value when establishing annual assessments for tax class 2 & 4 parcels. In 2024, over 18,000 New York City tax lots were still identified as failing to comply fully with the New York City Department of Finance (DOF) RPIE-23 filing requirements. It’s difficult to know why each owner repeatedly assumes their real estate tax assessment responsibilities are fully satisfied as the RPIE is a decades old requirement. Granted, there are more recent facets to comply with that are perhaps causing a resurgence of non-compliance (return of the rent roll for many properties and the new storefront registry for many).

As has also been the case for decades, owners of income producing properties must divulge their profit and loss, but the city has no reciprocal obligation to utilize the data in whole or part. For owners that miss the usual June 1^st annual deadline, DOF continues to issue fines to anyone deemed non-compliant. While a $300 fine for the lowest level assessments (properties paying approximately $5,000-$10,000 in annual property taxes) appears relatively insubstantial, there are many relatively typical parcels that receive a minimum fine of $5,000 for their non-compliance (many paying less than $100,000 in real estate taxes annually).

Property owners are also punished via automatic forfeiture of a substantive hearing at the New York City Tax Commission - the following year - if they are identified by DOF as RPIE non-compliant. While that does not invalidate or prevent a protest, it does necessarily delay substantive review. Historically, DOF has frequently used the most unfavorable factors when estimating income, expenses and cap rates for non-compliant properties. Most attorneys urge filing a protest every year, but it’s essential after indicated non-compliance.

The RPIE is also required for non-income producing properties. Many property owners erroneously assume they are exempt simply because they filed an exclusion previously. This presumption is purely wishful thinking, because use and occupancy change regularly, especially in the period coming out of the pandemic (owner occupied to rental, or commercial changing to residential for examples). If you are usually exempt under one of the RPIE exclusions, you must still file and indicate which one applies this time or you will be deemed non-compliant (a relatively insignificant amount, if truly eligible).

Complications for property owners continue to be caused by discrepancies between the tax commission income & expense form (TC201 generally) as compared to the same reporting period for the DOF RPIE. RPIE data covering the same reporting period must match tax commission data identically. If an error or omission is detected, after filing with the tax commission, an amended income and expense report should be submitted as promptly as possible by affidavit.

The biggest danger associated with the RPIE program continues to be the overly confiscatory “third strike” provision. Failure to file the RPIE for three consecutive years enables DOF to issue a secondary fine equal to 5% of the final assessed value of the subject property. For example, a property presently assessed for $5,000,000 fails to file for three consecutive years. They could receive a fine of $270,000 this year ($250,000 for the 5% rule and another $20,000 for this year’s base RPIE violation).

While it is difficult to mitigate or entirely remove fines issued by DOF for RPIE non-compliance, there are times when pursuing a reduced fine proves worthwhile. Our firm has been successful in removing fines, interest and penalties where appropriate. We have also been successful in mitigating fines where an RPIE was required in whole or part. In the end, it is up to each property owner to engage in quarterly due diligence including checking your tax bill on DOF’s website for any penalties you may be unaware of. Frequently, property owners fail to exercise appropriate due diligence particularly in circumstances where real estate taxes are escrowed and paid by the lender. The tax bill may be addressed to the lender including related DOF documents such as notices of non-compliance and opportunities to cure and avoid fines.

If there is any doubt, file. Make certain the preparer formally initiates the “submit” button and retain a copy, which includes DOF’s system date and time indicating the form was filed. If you have any questions, contact your tax certiorari counsel or other preparer to determine what is required. Pursuant to law, filings should be made on-line only at nyc.gov/rpie.

Peter Blond, Esq. is a partner at Brandt, Steinberg, Lewis & Blond LLP, New York, N.Y.