New York City's Department of Finance is dispatching a second wave of pied-à-terre tax letters to roughly 10,800 property owners — even as it mails a very different kind of letter to a separate group from the first round, telling them, in effect, never mind.

Roughly 17,000 owners received a notice this summer warning they might owe the surcharge, which applies only to non-primary residences. The tax carries a rate of 0.8%–1.3% on homes over $5 million and 4%–6.5% on condos and co-ops over $1 million. But 1,210 owners from that first round are now being cleared outright, according to new court filings disclosed this week.

The explanation has nothing to do with a change in the law and everything to do with timing. New York State sent the city's Department of Finance preliminary 2025 income-tax records on Aug. 12 — several months earlier than the agency would normally begin receiving them. Of the cleared owners, 630 were cleared because their 2025 tax returns listed the property in question as their primary home address; another 580 were cleared using a mix of 2025 extension filings and 2024 returns.

"So by my last count, I think we sent out less than 20,000, 'you may be subject to' letters, I think it was about 17,000 or 18,000. And at the time that we sent those out, we did not have access to the 2025 income tax filings," Mayor Zohran Mamdani said at a Wednesday press conference. He noted that the timing was not unusual on the state's end: 2025 filings are "typically released in February of the next calendar year," and this time the state simply gave the DOF early access.

Randy Mastro, the attorney suing the city over the rollout — and a longtime suer of the city in general — made his position clear in the court filing. "There are many thousands fewer property owners subject to this surcharge than this administration originally boasted when it flooded the landscape with 17,000 threatening Mailed Notices."

"The City has now effectively admitted" that some people who received the letters, Mastro said, "do not actually owe this surcharge." He also argued that the timeline undercuts the city's excuse: "The City admits that, after this lawsuit was filed on August 7, it obtained 2025 tax information within five days," which he claimed is evidence that the DOF could have obtained the same data before mailing anything — not only after being sued.

Mamdani laid out three categories of properties the city is targeting. The first covers properties owned by a corporate entity such as an LLC or a trust — about 6,400 households — where the DOF does not have enough information on the primary residence holder. The 1,210 owners now being cleared make up the second category. The third category, roughly 4,400 households, consists of properties for which the DOF has no 2025 tax returns that would indicate whether they are primary residences. The first and third categories together account for the 10,800 letters now going out to owners, a narrower mailing than the first round but still large enough to keep the city’s new surcharge rollout under scrutiny.

A rocky rollout

New York Gov. Kathy Hochul, who stood alongside Mamdani when the tax was first announced in April, said this week she "wasn't a fan of the rollout" and that City Hall was working to correct the problems. Mamdani, speaking at the same press conference, held firm on the tax's revenue target: "We continue to be confident in that assessment of what the annual revenue will look like."

Ryan Lavis, a DOF spokesperson, said: "From the beginning, we have been committed to ensuring that New Yorkers have the time and information they need. Property owners have until October 6th to file an exemption application. We have received the tax information from the state for 2025 and want to give New Yorkers more time to apply for an exemption, if applicable.

Mamdani noted that Oct. 6 is not necessarily the final word for owners who miss it. "If New Yorkers still want to appeal an assessment, they can still appeal to the tax commission until early next year."

New York City's pied-à-terre tax began as a Tax Day pitch. Mamdani and Hochul announced it in April, with Mamdani unveiling the plan in a video filmed outside Citadel billionaire Ken Griffin's $238 million penthouse. The state legislature passed the measure on May 27, and Hochul signed it the next day.

The rollout is what actually caused the uproar. The DOF's supplemental roll, meant to flag properties that might owe the surcharge, ballooned into an unfiltered list of nearly a million properties, was instantly branded a "rich hit list" online, and united the ultrawealthy and the merely well-off alike in opposition once thousands of legitimate primary residences were needlessly swept into the agency's notices. That confusion is now the subject of Mastro's active lawsuit.

This story was originally featured on Fortune.