Judge orders New York to prove each of its 17,000 pied-a-terre tax findings with records

Owners should not expect much time to act. Matt Rauschenbach, the mayor's spokesperson, said "Today's decision is wrong" and described what a stay would let the city do: "With a stay, we will continue implementing the surcharge fairly, efficiently and in full compliance with the law, as we have since day one." ^[6] A source with knowledge of the city's plans told Fortune the appeal, and the automatic stay that comes with it, were expected on Tuesday evening, the same day as the ruling ^[7][1]. If both accounts hold, billing could resume within hours of the order ^[20].

What owners keep is the standard State Supreme Court Justice Wayne Ozzi set. Before the city decides a property is a second home, it has to review all the information available to it and produce the records backing the claim ^[2]. Randy Mastro's suit argued that the Department of Finance skipped the individual determination state law required, and that it made homeowners prove they did not owe the tax ^[9]. On Tuesday Mastro said the city must now decide owner by owner who owes before demanding payment ^[11].

The city has already done part of that work. It checked its flagged list against income tax filings only after the July mailing ^[19]. Mastro, who has lived in Manhattan for decades, got a notice. "I got one, and everyone knows I'm a New Yorker," he said in August ^[14]. Complying with Ozzi's order would mean cancelling the notices and starting the process again, this time with tax data the city already holds ^[1][19].

The city had counted on at least $500 million a year from the surcharge ^[5]. Spread across the roughly 17,000 July notices ^[3], that comes to about $29,400 per notice ^[18]. If the notice list is close to the list of people who will eventually pay, every owner who proves a primary residence raises the average the city needs from those left ^[18].

The appeal can go one of two ways. An appellate court could reverse Ozzi, leaving the notices and the burden of proof where the city put them. Or it could affirm, and the Department of Finance would have to rebuild its list property by property before billing anyone ^[2]. A separate suit could end the procedural fight altogether: Wilbur Ross, his wife Hilary Geary Ross and casino developer Steve Wynn sued the state on Monday, arguing the tax is unconstitutional because it falls only on people who do not live in the city ^[12]. I think the order, if it survives, costs the city time and leaves the tax standing, because the city has already run the tax-filing match once ^[19]. A reversal on the burden question would prove that wrong and send owners back to proving they do not owe. The view is also wrong if producing records for each property turns out to be harder than the filing match and the list shrinks again. In that case the order costs the city revenue, not only months.

Mastro said the court "recognized we were right all along" ^[11]. Ross, who is not part of the Staten Island case, expected an appeal. "Now undoubtedly there will be an appeal filed, so it's not necessarily 100% over," he said ^[13]. Gov. Kathy Hochul's office kept to the policy. Jen Goodman, her director of rapid response, said the suit "is a matter for the city and the courts to work through" ^[17].

Mastro's third claim was that nothing in the law allowed the city to publish an online database of more than 900,000 properties with owners' names and addresses ^[10]. That is about 53 properties listed for every notice mailed ^[16]. Fortune's account does not say how Ozzi ruled on that claim.