Tax refund companies' donations lawful, troubling

Nassau County Executive Edward Mangano (March 19, 2012)

Nassau County Executive Edward Mangano (March 19, 2012) (Credit: Howard Schnapp)

Joye Brown

Newsday columnist Joye Brown Joye Brown

Joye Brown has been a columnist for Newsday since 2006.

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Nassau's policy of encouraging residents to appeal tax assessments is funneling millions of dollars to tax refund companies, which have ratcheted up contributions to County Executive Edward Mangano and other Republicans.

The cycle, which feeds public cynicism about government, is not illegal under campaign finance law.

But it ought to be.

Mangano has included principals of tax refund firms on his Assessment Reform Team. Nothing wrong there. Mangano was looking to benefit from the considerable amount of expertise companies gained from years of dealing with the county's dysfunctional tax assessment system.

Still, it was unsettling to see the county's top elected official -- who is charged with fixing the assessment system -- standing at a recent news conference with firms that likely would see greater benefit from a broken system than one that's fixed.

During that news conference, Mangano also tapped the expertise of firms in settling thousands of assessment appeals. Like former County Executive Thomas Suozzi, Mangano's goal is to try to correct flawed preliminary assessments before the tax roll is certified.

Nothing wrong there, either. It's a move that saves Nassau from paying tax refunds, plus interest -- no small thing in a cash-strapped county with a state control board overseeing its finances.

According to a report in Wednesday's Newsday, Mangano, using a variation of the novel borrowing model he put forth for privatizing management of county sewers, wants to sell $20 million in county tax refund debt to a private investor. The investor then would be repaid with interest out of Nassau's tight operating budget over seven years.

Mangano and tax refund company representatives praised the proposal, saying it would repay homeowners who've waited a year for their money and save Nassau the conventional cost of borrowing plus interest. Nobody bothered to state the obvious: A portion of refunds to homeowners who hired tax refund firms would go to the firms.

And some of that likely will go back to public officials and political committees in the form of contributions.

According to another Newsday report Wednesday, residential tax protest agencies or their principals have contributed nearly $450,000 to local candidates and political committees on Long Island since 2009. More than $70,000 went to Mangano, who was elected in 2009.

"The tax cert community is making a bet, a business investment that unfortunately is allowed by law," said Lawrence Levy, executive dean of the National Center for Suburban Studies at Hofstra University. "If the public is outraged, they should change the law and bar contributions."

Mangano has said repeatedly that his goal is to fix Nassau's assessment system. Until then, homeowners who don't appeal their assessments will have to pick up the slack from homeowners who win their challenges.

Which means more homeowners are going to appeal. Many will rely on the expertise of tax refund companies.

But there's another option: Use the form on the county assessment review commission's website and file the appeal yourself.