This summer, an official letter landed in some 17,000 New York mailboxes with an unsettling message: their home might be subject to the new surcharge on luxury second residences, and if they believed it wasn’t, the burden was on them to prove it. Many of those recipients lived in the house in question year-round. On Tuesday, a judge agreed with them on the essentials: this is not how it’s done. What the judge said Wayne Ozzi, a state Supreme Court justice in Staten Island, concluded that the Department of Finance violated the due process rights of the homeowners who sued. His central reasoning was that the city had enough tax data at hand to distinguish a primary residence from a second home, and did not use it. By skipping it, the city shifted onto owners a burden that was not theirs to carry: proving something as basic as where they live. According to the ruling, that burden is no minor detail. Many owners, especially those less familiar with bureaucratic procedures, might need lawyers or accountants just to document information the administration itself had within reach. The notices, the judge added, made owners spend time and money unnecessarily and did not explain what evidence they were expected to submit. What he ordered The decision has several parts: - Cancel all notices sent so far. - Replace the broad roll of potentially affected homes with a narrower one that reflects only the properties that actually owe the surcharge. - Send new notifications only after an individualized determination, based on all the resources and information available to the Department of Finance and backed by records supporting each case. According to Politico’s coverage, picked up by other outlets, the ruling also eliminates the exemption mechanism the city had set up, which the judge described as unlawful shifting of the burden of proof. A lawsuit against the method, not the tax It is worth being precise about the scope. The three plaintiffs did not challenge the city’s ability to collect the surcharge, but how it went about applying it. They argued that owners whose homes are their primary residences were wrongly identified as potential taxpayers. Among them are the wife and father of Republican Staten Island Councilmember Frank Morano. They are represented by Randy Mastro, a former deputy mayor. The surcharge reaches homes worth more than $5 million held by people who do not live in the city, as well as co-ops and condos valued at $1 million or more. According to the administration’s estimates, it would affect about 10,000 properties and raise $500 million to close the budget deficit. It was approved in April, alongside Gov. Kathy Hochul. Mistakes from the start The case exposed flaws in the method. The city acknowledged that it did not check personal income tax returns before mailing the letters. When it did, thousands of properties that had received the notice turned out to be primary residences. In addition, after the mailing, it obtained more recent tax forms from the state six months ahead of schedule and told hundreds of people that, after all, they did not owe the tax. The ruling came one week before October 6, the deadline to request an exemption. The parties respond Mastro said he was gratified and criticized that it took a lawsuit for the administration to correct course. In his view, City Hall should have admitted its errors and fixed them instead of spending time and public money defending them in court. From the mayor’s office, spokesperson Matt Rauschenbach called the ruling wrong and defended the surcharge as a matter of fairness: anyone who can afford a luxury home in the city can contribute to the schools, streets and parks. City Hall appealed that same night and invoked the automatic stay provided by state law, which puts the ruling on hold and allows the surcharge to keep being implemented while the case moves forward. It was not the first time: in August, Ozzi issued a temporary restraining order, and the city’s appeal kept it from taking effect. A widening judicial front The same Tuesday, a group of Suffolk County homeowners and a co-op sued the State of New York. They argue that the law discriminates against nonresidents, applies retroactively and imposes unconstitutional burdens on owners and co-op buildings. Unlike the Staten Island case, this one attacks the legality of the tax itself.