Compliance deFINED Blog

How to Reduce or Eliminate Penalties

by Robert Fried on March 15, 2018 , Comments Off on How to Reduce or Eliminate Penalties

Of course, it’s best to avoid penalties completely. Sometimes, though, you can be caught off-guard and find yourself liable for a hefty penalty for a violation that completely slipped your mind.

Once that’s happened, here are your options:

  1. Curing Violations

The best way to avoid paying a penalty is by fixing a DOB-ECB violation.  If this is offered as an option to you, you’ll find a cure date listed on your violation – you must fix the problematic area before this date. All Class 3 violations and some Class 2 violations have this option; Class 1 violations do not.

You’ll find your violation’s designated class on your penalty sheet.

Any violation marked as “Aggravated II” is not eligible for cures.

You won’t have to rush to fix your violation – the cure date is usually 40 days from the date the violation was issued. Be aware, though, that you’ll need to submit a Certificate of Correction (AEU-2 form) to let the DOB know that you are curing the violation. This means you are admitting to being guilty of the violation. Consequently, any future violations for the same issue may make you liable for additional penalties and may not be eligible for a cure date. The good news is that if you successfully fix this violation on time, you won’t have to pay a penny in fines and you won’t have to show up for your scheduled hearing.

If you don’t plan on fixing your violation, you’ll still need to submit a Certificate of Correction just to ensure that the violation was issued and is not closed. If your violation was in the Class 1 category, this will also prevent you from being saddled with additional penalties.

  1. Stipulations

Some violations are eligible for Stipulations. You’ll find this determination marked on your penalty sheet.

If you choose to enter into a Stipulation, you’ll only be liable for half of the imposed penalty amount. To do so, you’ll need to admit to the violation and to file a Certificate of Correction with the Department within 75 days of the pre-hearing or hearing Stipulation date. If you fail to do so, you will be held accountable for the full penalty amount.

Criteria for Stipulations are similar to that of cure dates – no Stipulations are offered for Aggravated II penalties.

  1. Mitigations

If the fined party can prove the violation was corrected prior to the hearing date, they may be eligible for a mitigated penalty. As with cure dates and Stipulations, you can determine whether your violation is eligible for mitigation by simply checking your penalty sheet. Also, any violations classified as Aggravate II, are not eligible for mitigations.

What are Aggravated Penalties?

Now that you know what course of action you can take when issued a violation, let’s explore the subject of aggravated penalties. In short, this refers to a repeat offense. There are two categories of aggravated penalties.

  • Aggravated I Penalties are imposed when it has been proven that the same condition or charge under the NYC Construction Codes, or the previous charge under the laws in effect before July 1, 2008, was issued in a prior enforcement action against the same owner or responsible party during the last three years. In other words, the same person is being charged with a similar infraction within three years.
  •  Aggravated II Penalties are imposed in any of the following situations::
  1. The violation of law is accompanied by or results in an accident, or poses a significant risk of either occurrence.
  2. The violation is accompanied by or results in a fatality or serious injury, or poses a significant risk of either occurrence.
  3. The violation condition affects a large number of people.
  4. The respondent or defendant withholds requested information necessary to determine the condition of a building or site.
  5. The respondent has a history of non-compliance with DOB rules at one or more locations.

As mentioned above, Aggravated II penalties are not eligible for cure dates, Stipulations or mitigations and demand a hearing attendance. Both classes of aggravated penalties incur steep fines.

This all sounds a bit confusing to you or just too much to handle? As always, Jaffa can help you with any of these processes and reduce or eliminate any penalty you may have incurred.

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What you need to know about the ECB Penalties Increase

by Robert Fried on March 6, 2018 , Comments Off on What you need to know about the ECB Penalties Increase

Violation issues and their ensuing penalties are the nightmare of any landlord. Aside from being forced to navigate court hearings and a bureaucratic maze, pushing off a repair, delaying the re-installation of a fixture that was destroyed or deemed inoperable, or neglecting to attend to a structural fallout can mean paying tens of thousands of dollars in fines.

Every year, the DOB meets to discuss proposed increases to the ECB penalty schedule. As you’ve probably heard, this year, quite a lot of penalties will be increasing.

While these increase should have you worried, at least you can be assured that as always Jaffa is here to help you navigate these changes and to break down what exactly you need to know about the latest NYC compliance code changes.

What’s Changing?

There are lots of penalties scheduled to increase this year. Several of them will even double in amount – or more. Here are some you should know about:

• Many Aggravated I default penalties are jumping to $25,000.
• Some new infractions have been introduced, primarily effecting construction equipment.
• The Class 1 infraction 28-304.1 – failure to maintain an elevator or conveying system will see a huge jump for standard penalty, increasing from $1,000 to $12,500.

Believe it or not, some fines are actually decreasing. The most significant reduction that will affect you as a landlord is the Class 1 infractions for failing to install luminous egress/photo-luminescent exit path markings in a high rise building. While maximum amounts aren’t changing, first-timers and Aggravated I offenders will see a nearly 50% decrease in fine amounts.

You can check out the full DOB Penalty Schedule for 2018 here.

But regardless if the particular penalty you find yourself facing has increased or decreased, you never want to pay full price anyway. When it comes to how you handle a violation and/or penalty, there are many options besides just writing the check. Check out our next blog, for ways to reduce or eliminate your penalty.

And if you’re still worried about the penalty increases coming your way? Don’t! Jack Jaffa & Associates can help ensure that you’re always following the NYC compliance code, so you can hopefully avoid them all together.

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Jack Jaffa Training Seminar January 2018

by Aaron Munk on February 7, 2018 , Comments Off on Jack Jaffa Training Seminar January 2018

Jack Jaffa & Associates’ (NYC’s Violation Compliance Experts) comprehensive training seminar for all their employees covering a broad range of topics, including better time management, client crisis management and how to better serve their clients overall featuring noted writer and editor Michelle Herrera Mulligan.

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Cost Segregation Broken Down

by AJ Sabo on February 5, 2018 , Comments Off on Cost Segregation Broken Down

There’s no way to get out of paying taxes; it’s an inevitable part of life, like the disproportionate amount of red lights you always encounter when you’re running late.

But there is something you can do to lower your taxes this year: participate in a cost segregation study. Tax rules and regulations got you confused? We’re here to help! Read on, and learn all you need to know about this underused mega-break in property taxes.

What is cost segregation?

Cost segregation refers to the practice of identifying assets and their costs, and classifying those assets for federal tax purposes. In plain English, this means separating various building costs so that they can be taxed with an appropriate depreciable life.

In order to properly identify assets and their costs, a cost segregation study is performed. In this study, commercial building costs which were previously classified with a 39-year depreciable life can instead be classified as personal property or as land improvements, with a 5-, 7-, or 15-year depreciable life, significantly lowering their tax liability.

Benefits of a cost segregation study

Why bother with this extra step when you have enough on your head already maintaining your properties, complying with all relevant laws, and paying taxes?

The reason is simple: cost segregation results in an immediate increase in cash flow. Your tax liability will be reduced, keeping more of your money in your pocket. To make it even better, cost segregation laws allow you to reclaim depreciation deductions from previous years that you may have missed because you neglected to do a cost segregation study – all without having to amend your tax returns. It doesn’t get much better than that!

Can’t I just do the work on my own?

With a tax code that’s even more complicated than the NYC compliance code, having an official cost segregation study done on your properties and assets is crucial. And yes, even your accountant may not understand exactly how to apply the asset depreciation rules.

Here’s how it works: Cost segregation is based on the principle that “a dollar today is worth more than a dollar tomorrow.” The same logic carries over to the following statement: “A tax deduction today is worth more than a tax deduction tomorrow.”

Normally, an entire commercial building’s depreciation value will be set at 39 years, and a multi-family dwelling will have a depreciation value of 27.5 years.  But as you and anyone who’s ever been tasked with maintaining a building knows, most assets in your properties will not last that long. Some will last 5 years, some will make it to 7 years, while others will put in a full 15 years of service – but still won’t make it to 39 years. Therefore, these assets depreciate at an increased rate and deserve a lower tax liability.

An accountant, and most laymen, will lump every asset in a property together and keep it at the 39-year depreciation mark. If you’re smart, though, you’ll have a cost segregation study done to properly identify, separate and reclassify every component of your property to a shorter depreciable tax life, netting you a significant amount of tax savings.

So it is highly recommended that you don’t attempt this yourself but use a qualified professional.  Who is qualified? We can’t give away all our secrets at one time. Look out for our next blog where we will explore who is qualified to do a cost segregation study, when it is the best time to do one, which properties you should have it done for and what it costs.

Not interested in waiting? Contact a Jaffa representative today and find out how they can help you with cost segregation. Jaffa has expertly assisted real estate owners in identifying untapped sources of revenue for their properties for over a decade, and they can guide you through the cost segregation process and help you keep your money where it belongs, in your pockets.

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Michelle Herrera Mulligan Addresses Jaffa Employees at Annual Training Seminar

by Aaron Munk on January 22, 2018 , Comments Off on Michelle Herrera Mulligan Addresses Jaffa Employees at Annual Training Seminar

In their ongoing efforts to constantly provide better service for NYC’s property owners and managers, Jack Jaffa & Associates hosted earlier this month a comprehensive training seminar for all their employees covering a broad range of topics, including better time management, client crisis management and how to better serve their clients overall. The event took place in the Brooklyn Sheraton where a lavish buffet lunch was served. Michael Jaffa, COO, addressed the crowd, and thanked all the Jaffa employees for all their hard work and tireless dedication to the company and their clients, before introducing the keynote speaker, Michelle Herrera Mulligan.

Ms. Mulligan, noted writer and editor with more than two decades of experience in her respective industries, was brought in to speak to the employees about the essential tools needed to be better employees and provide better customer service. Drawing upon her years of experience, she explained to the Jaffa employees how they can improve upon every client-employee interaction. Along these lines, she discussed specific techniques of how to prioritize one’s commitments so that precious workday hours are not wasted and the important tasks are never neglected, and shared insightful ways to increase TLC to clients. She also demonstrated how to apply optimal client crisis management and stressed the importance of always making clients feel respected and appreciated. Her overall message was centered on ways to become a better service provider, as well as how to increase business and sales.

The Jaffa employees thoroughly enjoyed her presentation, with many stating that they were energized and invigorated to provide better service for their clients, and would start putting her tips to practice immediately. All-in-all, the Jaffa employees and event organizers called the event a resounding success and look forward to future ongoing seminars such as these so they can continue to improve in how they provide the variety of services Jaffa has to offer.

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Tax Incentives Made Easy

by AJ Sabo on January 12, 2018 , Comments Off on Tax Incentives Made Easy

It’s that time of year again! Whether you’re a genuine math-lover who gets a thrill out of crunching numbers, or you’re quaking at the thought of the long hours you’ll need to spend preparing your taxes, all property owners have one expectation in common when it comes to tax prep: to get as many benefits and exemptions  as possible.

There’s just one glaring problem: with a tax code as complicated as NYC’s compliance code, finding which credits and deductions you qualify for can be a massive headache. You need to untangle the jargon of the tax code and then try to see if you fit the explicit criteria specified. Of course, no matter how well you do your homework, you’re always left wondering if you missed something important and you overpaid by thousands of dollars.

It’s hard not to get super-stressed just thinking about it.

No worries, though; we’re here to help! You already know that Jack Jaffa & Associates wants to make your life as a landlord as simple and profitable as possible, and you won’t be surprised to hear that tax prep is no exception. No matter how complicated you think your taxes and finances are, we’ve got you covered!

In the last three decades, our professional team has enabled hundreds of New York City developers to maximize their tax incentive values for properties ranging from new construction and preservation to major capital improvement projects; from luxurious high-rise condominiums to affordable housing projects; from commercial and manufacturing facilities to single family residences.

Since 1979, our team’s tax consulting services have  saved NYC property owners hundreds of millions of dollars.

Our years of experience in the field have granted us the unique opportunity to build strong, collaborative relationships with HPD, DHCR and the Department of Finance. This has helped us to identify, facilitate and secure benefits available through these agencies, specializing in a broad range of government incentive programs.

Here’s a quick rundown of some of the programs you may not be benefiting from that might be able to save you thousands of dollars:

  1. 421-A

Partial Real Estate Tax Exemption Benefits Program which benefits developers of new multi-family residential housing buildings containing four or more dwelling units.

Are you working on a multi-family dwelling? Have you recently developed an apartment building? If yes, then you may be qualified for this exemption.

  1. J-51

Tax Exemption Benefits Program which provides tax incentives for developers who’ve rehabilitated or executed major capital improvements in residential properties. It also provides benefits for any property whose status has been converted from commercial to residential.

This means, if you’ve successfully improved a dilapidated residential property or changed a commercial storefront to a residential dwelling, you qualify for this incentive.


Industrial and Commercial Incentives /Abatement Program which benefits newly constructed or modernized commercial or industrial properties. Please note that it is crucial that applications for these programs be filed prior to obtaining any permits.

Have you recently constructed or updated any kind of commercial property? As long as you’ve filed for these programs before acquiring your permits, this one’s coming to you!

  1. MCI

Major Capital Improvement Rent Increase Program which allows landlords to recoup the cost of building-wide capital improvement expenditures.

Spent a ton on major improvements for your rental properties? You may just be able to put some of that money back in your pocket!

We don’t need to convince you how much you can save by capitalizing on every tax incentive you have coming to you. It’s more than just saving a buck, though – or even saving a few grand. By properly identifying and claiming the right advantages and incentives, you can significantly slash your operating costs. This, in turn, can help you secure better financing deals and create more attractive marketing conditions for all of your properties.

Here at Jack Jaffa & Associates, we are dedicated to helping each of our clients obtain the most incentives possible in the shortest amount of time. Call us today to find out how we can help you maximize your benefits this tax season.

You have nothing to lose and so much to gain!

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