Village Investigates Possible Cause of Missing Tax Bills

After alerts from surprised residents the Village Board and Village Treasurer are now investigating why there were so many late tax payments resulting in high penalties this year. The problem stems from the school tax portion of the tax bill, issued on August 31, 2023. Residents have the option to pay in one installment or split their payment into two, with the first due September 31, 2023 and the second due January 31, 2024. For those who split their payments, the onus is on the taxpayer to make the second payment. No second invoices are mailed.

Village records show that 216 residents failed to make either the first or second payment and another 284 failed to remit the second payment.

Some residents are reporting that they did not receive the original tax bills in the mail or emails from the Village notifying them that taxes were due.

At the February 27, 2024 meeting of the Village Board, Mayor Justin Arest reported what he has learned so far about the issue and what will be done.

Here are his remarks followed by public comments from concerned residents:

Comment From Scarsdale Mayor Justin Arest

I would like to start this meeting speaking about the tax delinquencies from the 2023 School Collection and the timeline of events. My fellow Trustees, staff and I all recognize the distress of receiving notification of late payment and having to pay penalties and interest. We have listened to your comments and concerns and spent considerable time researching what has happened and if additional measures can be taken to mitigate this from occurring again. The following information is from the documentation we have been able to collect thus far, detailing the four communications sent by the Village to remind residents about paying the school tax bill. School Bills were mailed August 30, 2023 at 3:40pm in White Plains by the Village’s vendor, Ross Mailing Service. We have verified that Ross Mailing Service received the correct number of bills from the Village, and that the post office received that same number of bills from Ross. In other words, all 4,055 School tax bills were created as pdfs by the Village and both printed and provided to the post office by the vendor for delivery to the taxpayers. The remaining tax bills are escrowed by residents and paid by their mortgage lenders.Scarsdale Mayor Justin Arest says the tax bills were mailed.

On August 25, 2023, all residents who registered to receive a reminder message from the Village’s tax notification and payment system, were sent an e-mail from the Village about the School tax bills.

The Village mailed School Tax Second Installment Reminders (not a tax bill) from Village Hall in mid-January.

The Village sent email reminders to residents of the second payment date on January 11, 2024.

As you know, we began splitting village and school tax payments in 2020. In the first year of a split school tax, 72.54% of total school taxes levied were collected as of October 31, 2020. We have seen a downward trend in this collection number since that time. That total percentage collected after the first payment was due declined in 2021 to 64.9%, 62.11% in 2022 and 55.64% in 2023. Between October 31, 2023 and December 31, 2023 (before the second installments became due), the Town collected $9,833,187 so that the percent collected grew from 55.64% to 61.94%.

As of January 31, 2024 (after the second payment was due), the Village had collected 91.245% of School Tax Levies. This percentage was 98.12% in 2022, 98.18% in 2021 and 94.11% in 2020. Late notices were mailed out by Ross Mailing Service on 2/12/2024 from White Plains at 3:45pm and emailed from Village Hall on February 7, 2024. Residents were also sent annual property tax statements for 2023 County, Village and School taxes printed on February 7, 2024 and mailed from Ross Mailing on February 14, 2024 from White Plains at 3:37pm. The Treasurer also notified me, and the Board that she had concerns about a low collection rate.

Ross Mailing Service has done the printing and mailing of tax bills for Yonkers and Greenburgh for over 30 years. They also do the mailing for many printing houses that handle other Westchester municipality tax bills.

The Treasurer’s office has been verifying that emails were sent using the office’s user interface for that system. Because of complaints from residents that they did not receive the e-mails this year, the Treasurer requested back-end access into the vendor’s system to reverify that those emails went out and garner additional details. Looking at the back-end system and comparing it to the information normally available in the system to its users has shown some discrepancies. That is currently being investigated with the vendor. To be clear, this is for the emails only as the hard copies are not handled by this system. I should also state that this initial review has confirmed that nothing in the process undertaken by the Treasurer’s Office for tax collection has changed this year. The same systems have been used as in prior years. When the split payment system was implemented in 2020, taxpayers only received the initial bill. There were no e-mails or reminders. The additional steps that exist today were implemented by the current Treasurer, Scaglione, once she began her tenure with us for the 2021 tax collection period.

We are continuing to work with the United States Postal Service to learn more about what took place. One possible theory is that the first mailing took place only about four weeks after a car drove into the Golden Horseshoe post office. Their operations had to make substantial changes until that location could be reopened. I did not include this in the facts previously because while the accident and closure of that branch is a fact, I cannot say with any certainty that the change in operations led to any impact on deliveries.

We did not start this investigation, nor do we continue it with any preconceived notions. This is not about blame. It is about determining what needs to be addressed, where potential failures occurred, and how we can do better. Even before the 2023 tax collection period began, the village began working on improvements. This includes the tax collection program, the user interface, and reminders. While I hope this is reassuring to many of you, it does not change anything for what has recently taken place.

When the Village initially discussed allowing split tax payments, former Manager Pappalardo was concerned that the end result would actually be deleterious for many residents due to the likelihood of an increase in missed payments. I shared this concern and while I voted yes, I noted that my preference would have been to do the split for a year or two and collect the data and revisit the issue. The data is clear that penalties have gone up dramatically since payments were allowed to be split beginning in 2020. I think we may want to revisit this in the coming weeks at least for the Village tax payment and decide with the community if bringing that back to one payment might be a wise option. Just looking at the raw numbers, the average annual penalties collected for tax delinquencies from the 2014-2015 fiscal year through 2019-2020 was $496,639. Over the last four years, which includes an approximate for what is expected for the current fiscal year, that average is $1,781,876. Again, the split was done with the hope of helping taxpayers during the pandemic. No-one in village hall or on this dais benefits from penalties. We go through an intensive budget review every year before this board votes on the budget for the upcoming fiscal year and work to match the needs of our community with our financial resources. We would much prefer not to have this money as a revenue source.

The laws regarding the collection of property taxes are governed by the NYS Real Property Tax Law, which is applied uniformly across the State, and the Westchester County Administrative Code, which applies to all municipalities in Westchester. There is no Scarsdale Village law governing the collection of taxes.

This investigation continues. We are working with our counsel as well as elected representatives to determine the universe of options available to us. When there is more information to share, I will do so. We appreciate your patience.

Public Comments

Some residents came to Village Hall to speak and others commented via Zoom.

Howard Berk of 9 Reimer Road said, “Our money was inadvertently taken by the village. These were unintentional delinquencies. I am not sure why a flag wasn’t raised earlier in the process. What can be done? Are there ways you can pay us back? Are there workarounds? Will you go to the mat to get our money back? I want to hear the vigor of the board in how we are going to get the money back.”

Chaowei Huang of 38 Lawrence Road said he paid a $1,000 property tax penalty at beginning of February. He said, “Prior to that I never received any mail to remind me about the tax. In December I called Village and asked if I owed taxes and told no tax was due. How much was received in penalties and how was it utilized?”

Wanma Ling of 12 Cooper Road said, “I moved from Hong Kong 5 years ago. All my friends rely on the paper notification. We always receive it – never miss it. We always pay on time. This year we did not receive a bill. We all love this community. If you found out the payments were lower than previous years did you do anything to warn the community? Instead of sending a penalty, why not send a warning letter? What went wrong?

Quansheng Tang of 64 Mamaroneck Road said, “We moved here last year in March. We received all the bills last year on time and paid. We were invited to register online – but we did not know that by registering online we would no longer receive a bill in the mail.”

Robert Berg of 19 Carriage House Lane said, “I am troubled by what happened here. This is not the first time we had this problem. It happened in 2020 and people missed the payments. Can you tell us how much in penalties has accrued as of today? There were red flags – and no one took any action. There was no reason not to send letters. We’re talking big money here. It’s not fair to people. Given that they can’t get refunds it is not right that this took place – given that this is the second time.”

Nicole Lemrod of 3 Murray Hill Road said, “I have lived here 12 years and consistently paid my bills on time. I was notified 0 times. I didn’t receive either mailing or any emails. Someone needs to be held accountable. I hope the board fights for its residents and finds a way to refund the money to us.”

Gerald Silk of 17 Burgess Road said “I have lived here for 15 years and paid every bill in a timely fashion. We live in a community and want what is best. What happened is unfortunate. It was an error on the part for the office. If the state law prohibits a refund, we should get creative and give a credit on future tax bills. For the good of the community, the trust in the process, we need this to be rectified.”

Andrew Ward of 29 Cooper Road said, “I lived here since 2002 and paid my taxes on a regular basis. A deep investigation needs to be undertaken. We never received the bills, emails or any delinquency notices. I never signed up for email delivery. The board needs to take a deep dive into how we are collecting taxes. It seems there is miscommunication going on. I never seem to have any trouble receiving any other bills. It is troubling that the Village Treasurer knew there was significant delinquencies in November and did not follow up. Are we relying on these fees to pay other bills? Who is accountable and how will it be rectified in the future?”

Elizabeth Ward of 29 Cooper Road said, “What steps are you going to take to get us our money back? We are out a lot of money. And we got no mailings. We lived here for 22 years and we have always paid on time.”

Keely Mann of 23 Cooper Road said, “I am the third person on my block who did not get the bills. I have lived here for 10 years and always pay my bills. How will I get back the fees and penalties?”

Junaid Chida of 187 Fox Meadow Road said, “I got the first notice but I did not get the second notice.”

Sheeta Mehta of 74 Drake Road said, “We moved here in 2014 and this is the first time we did not receive the bill. It was quite a shock when we got the notice of failed payment. Why is the penalty 10%. It seems like a punishment for all of us who have don’t nothing wrong. What is the accountability of the Village for these penalties? The law is all against the residents? Why is this a one-sided occurrence? Why did the Village not reach out earlier? We all love this community, we are proud to be here and appreciate what all of you do for the community.”

The Mayor responded to the commenters saying, “The penalties are not determined by us. The funds have not been used. Any surplus funds will go to our fund balance.”

About the two-part payment system he said, “In 2020 the decision was made hastily. At the time the Treasurer made clear that we could only send out one bill with two stubs.”

He continued, “We are not happy about this. We don’t want your money and we don’t want this to happen to anyone. We are going to do a thorough investigation. No one is happy about this. We have receipts from the post office of the mailing of 4,055 tax bills. (He later added the balance of the bills were sent to banks/institutions who escrow residents’ taxes.) There are some discrepancies in the emails and we are looking into it. The trends in other municipalities are the same as our trends – similar to the Village tax. She did send an alarm after January 31, 2024. More and more people are paying in 2 installments. There was no alarm because this is following a trend.”

Village Treasurer Ann Scaglione added, “Most people wait until the last few days of the month to make payments so it wasn’t until January 31 that we saw that payments were lower.”

During the second public comments session a few more residents spoke:

Howard Berk returned to the mic and said, “It should not be us against you. You have our backs.
There is a crack in the public trust. No one wants to sue the Village. That is not our goal. It is more about assuring us you will do whatever is possible to get our money back. Just knowing that we are all rowing in the same direction to make us whole again. Mistakes happen. I just want to make that clear.

Mayor Arest replied, “We are committed to looking into this, what happened and what our options are. We do have the communities back and we will look into this to the greatest extent that we can.”

Dennis Ziman of 5 Reimer Road said, “I have lived here for 15 years. I did not get any notifications and then received the delinquency notice. This is money that affects people’s everyday lives. I think the Village should appoint an independent investigator.”

The Mayor answered, “I don’t think we intend to spend tax payer dollars on an independent investigation.”