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Council of New York Cooperatives & Condominiums
Article Archive
Tax Issues

Published: Spring 1998

Help us achieve tax fairness for homeowners in cooperatives and condominiums by making a contribution to the Action Committee fund.

ACTION COMMITTEE FOR REASONABLE REAL ESTATE TAXES
PUSHES FOR LONG-TERM PLAN FOR TAX FAIRNESS

The Action Committee for Reasonable Real Estate Taxes continues to monitor progress towards a long-term tax reform plan. Homeowners in cooperatives and condominiums throughout the city have been enjoying the benefits of the three-year abatement enacted into law in 1996. But, as we enter the final year of that abatement, it is imperative that a long-term plan be put in place to continue the process toward fair treatment of homeowners in cooperatives and condominiums.

The Department of Finance has been working to develop a plan, but to do so it needs to analyze the information recently received for the final year of the abatement. A draft of the long-term plan is expected this summer. Meanwhile, it is likely that a one-year extension of the existing abatement may be necessary to ensure that there is no gap between the current abatement and the long-term plan.

URGE LEGISLATORS TO CONSIDER PROPERTY TAX ISSUES
In an election year, candidates for the State legislature need to be aware of this important issue. As candidates approach you for support in the September primary, you should ask them where they stand on property tax reform. If tax fairness is new to them, make sure that you help them become informed. When the new State Legislature is elected in November, every New York City lawmaker should be strongly committed to supporting a tax reform plan that deals equitably with homeowners in cooperatives and condominiums.

The Action Committee will continue to work for a fair and reasonable tax structure for all New York taxpayers. As issues arise, the Action Committee will reach out for grass roots support for needed legislation. We encourage your attendance at Action Committee meetings and will be pleased to add your name to the Action Committee mailing list for updates and meeting announcements. Simply call the Action Committee at (212) 496-1306, or send your address by fax to (212) 580-7801 or by e--mail to info@cnyc.coop.

CNYC CHALLENGES IRS ON 277 WITH TEST CASE
In the 1996 Thwaites Terrace Owners Corp. case, the US Tax Court affirmed that no Section 216 housing cooperatives are subject to Section 277 of the Internal Revenue Code. But the Internal Revenue Service did not acquiesce in this decision. However, in refund cases filed subsequent to Thwaites, the IRS has been giving full refunds when small amounts are in question, typically $5,000 or less. In larger cases, it has been negotiating settlements up to 75% of the amount it initially deemed due.

Since the mid-1980s, CNYC and the Federation of New York Housing Cooperatives have been working through the National Association of Housing Cooperatives to confirm that Section 277 does not apply to any Section 216 cooperatives. To finally put this matter to rest, we have decided to actively challenge the IRS by funding a refund case, which we will try to make a test case. In September, we appealed for contributions to fund this challenge, suggesting that cooperatives contribute $250 each. Accounting firms, cooperatives throughout the city and other professionals have rallied to this cause, enabling us to move forward with the challenge. A Manhattan cooperative has agreed to be used for the test case, and renowned tax attorney Joel E. Miller has begun to work on the project. He is optimistic that the IRS can be persuaded to hold other unsettled cases in abeyance until this test case can be heard. Progress reports will appear in each CNYC Newsletter until victory can be announced.

NEW YORK STATE 277 VICTORY
In the New York Law Journal of April 21, 1998, Martin Stoll reports success in two New York State franchise tax cases involving Section 277. Two disparate decisions previously obtained by Mr. Stoll were heard at the appeals level by an Administrative Law Judge, who ruled that Section 277 does not apply to cooperatives. Mr. Stoll mentions our test case in this article.

CONTRIBUTIONS TO THE 277 CHALLENGE WELCOME
When successful, this 277 Challenge will finally relieve all housing cooperatives of the threat of 277 assessments. If your cooperative has not yet contributed to the 277 Challenge and would like to do so, your check to CNYC annotated "277 Challenge" will be very much appreciated. Unless we are advised to the contrary, we will add the name of your cooperative to the 277 Challenge letterhead upon receiving your contribution. If your building receives a notice from the IRS on the 277 issue, please alert CNYC.

In addition to this effort, the National Association of Housing Cooperatives continues to work for legislation to affirm that Section 277 does not apply to housing cooperatives.

 
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250 West 57th Street, Suite 730
New York, NY 10107-0730
Tel: (212) 496-7400
Fax: (212) 580-7801
E-mail: info@cnyc.coop
 
   
 
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