Use of Foreign Fire Insurance Tax Money (2017-MS-5)

Issued Date
January 12, 2018

[read complete report - pdf]

We also released four letter reports to the following entities: the City of Buffalo (Buffalo) and the Buffalo Firefighters Two Percent Fund (Buffalo TPF) [pdf]; the Syracuse Fire Department Association Inc. (Syracuse) [pdf]; the Mutual Aid Association of the Paid Fire Department of the City of Yonkers, New York, Inc. (Yonkers) [pdf]; and the City of Rochester (Rochester) and the Rochester Firefighters Two Percent Committee Inc. (Rochester TPC) [pdf].

Purpose of Audit

The purpose of our audit was to determine whether FFI tax money was spent in accordance with special act legislation, city charters or other applicable laws, for the period January 1, 2014 through October 5, 2016.


The recipients of foreign fire insurance (FFI) money include fire departments, fire companies, benevolent associations and the Firemen’s Association of the State of New York (FASNY). FFI is generated from a tax imposed on the premiums of fire insurance policies written by certain out-of-state insurers against loss or damage by fire on property located in the State. The insurer will collect and remit the tax money generally to NYS Department of Financial Services (DFS) which distributes the proceeds to the proper recipients. The statewide FFI tax money disbursed by DFS for 2014 through June 2016 (excluding NYC) totaled approximately $126 million. The taxes imposed are intended to directly benefit the fire department membership or fire companies providing the service.

Key Findings

  • While all six entities had a process for administering FFI tax money, officials in Buffalo, Syracuse and Yonkers did not always use it according to their specific special act, city charter or other applicable laws.
  • Rochester, the Rochester TPC and Buffalo TPF appeared to use their allocations of FFI tax money properly. However, the Rochester TPC and Buffalo TPF but did not always maintain adequate documentation for expenditures.
  • Yonkers did not use $1.4 million in FFI tax money for the care of indigent and disabled firemen and their families, as required by its special act legislation, but used it to reimburse costs related to active firemen and family members’ health benefits, social events and administrative costs.
  • Syracuse paid $390,826 in FFI tax money to “The Syracuse Fire Department Association Supplemental Retirement Fund Inc.,” which subsequently disbursed the money as one-time cash payments to individuals. Payments to 33 individuals totaled $610,848 for the audit period.
  • Buffalo paid $26,180 in FFI tax money during our audit period to a beneficiary who died in 1983. Payments were fraudulently collected by the daughter of the deceased and totaled $291,070 over time.

Key Recommendations

  • State policymakers should revisit the intent and structure of the FFI tax program to determine if it is operating as intended.
  • Officials should ensure that all FFI money is disbursed in accordance with State law, special act legislation, municipal charter or court-approved agreement; and only after supporting documentation is provided, reviewed and approved as a benefit to the membership.
  • Consult with counsel, as appropriate, to recoup FFI tax money inappropriately paid.