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NYS Comptroller


Taxpayers' Guide to State and Local Audits

Department of Taxation and Finance
Controls Over Unclaimed Bottle Deposits

Issued: December 19, 2017
Link to full audit report 2016-S-96
Link to 90-day response

The objectives of our performance audit were to determine whether the Department of Taxation and Finance (Department) is enforcing registration and reporting requirements on deposit initiators, and is collecting and depositing the required unclaimed bottle funds into the General Fund. The audit covers the period April 1, 2014 through February 6, 2017.

New York State’s Returnable Container Act (Act) requires every deposit initiator to collect a 5 cent deposit on containers of less than one gallon of many beverages sold in the State, such as soft drinks and beer. Consumers may then return their empty beverage containers to a dealer or redemption center to get their deposit back. Deposit initiators are required to establish an interest-bearing refund value account (bank account) for the sole purpose of refunding deposits. The Act requires all deposit initiators registered with the Department to remit 80 percent of any unclaimed bottle deposits on a quarterly basis. Along with the remittance, deposit initiators are required to keep track of all deposits collected and file quarterly reports with the Department detailing deposits, withdrawals, interest earned, and the quarterly ending balance of the bank account. The Department has the authority to penalize deposit initiators that fail to register with the Department or fail to file quarterly reports. The Act requires all unclaimed deposits collected by the Department to be deposited in the State’s General Fund. The Department collected $109.5 million and $102.7 million in unclaimed bottle deposits in State fiscal years 2015 and 2016, respectively.

Key Findings

  • The Department deposited all funds received into the General Fund as required.
  • The Department did not assess penalties on 39 deposit initiators that failed to file quarterly reports as required, and took little action to improve compliance. The Department also did not assess penalties for 301 of 539 quarterly reports that were filed late.
  • The Department does not have procedures in place to verify data in the quarterly reports submitted by deposit initiators. Our analysis identified multiple red flags that may be indicative of material errors and/or fraudulent reporting. For example, some initiators report bank account service charges that are significantly higher than those reported by other initiators. The service charges reduce the amount that the initiator is required to remit to the Department. Our analysis of a judgmental sample of 82 of 612 quarterly reports showed service charges for 60 were $100 or less, eight were from $100 to $500, eight were from $500 to $1,000, and six exceeded $1,000.

Key Recommendations

  • Assess penalties on initiators that fail to file quarterly reports.
  • Review the red flags that we identified in our report and take appropriate corrective action, such as requesting supporting documentation or conducting investigations.
  • Require deposit initiators to submit supporting documentation with their quarterly reports to support their reported amounts.

Other Related Audits/Reports of Interest

Department of Taxation and Finance: Processing of Paper Tax Returns (2013-S-64)
Department of Taxation and Finance: Controls Over the Collection of the Public Safety Communications Surcharge (2016-S-84)

State Government Accountability Contact Information:
Audit Director: Steve Goss
Phone: (518) 474-3271; Email:
Address: Office of the State Comptroller; Division of State Government Accountability; 110 State Street, 11th Floor; Albany, NY 12236