The letter - an Apparent Failure to Vote notice - informed Mr Lee he could pay a fine of $55 for not voting in the September 2017 election for the new Inner West Council, provide an excuse or challenge the fine in court.

"I didn't even know the council elections were on," he said. "It's the first time I've been fined but I've never voted in a council election in my life."

Mr Lee is not the only NSW voter to be hit with a fine by the NSW Electoral Commission.

More than 400,000 people have been sent an Apparent Failure to Vote Notice for the 2017 local government elections after almost 530,000 people, or 20 per cent of 2.73 million eligible voters, failed to cast a vote on September 9.

In comparison, more than 420,000 people out of 1.96 million eligible voters failed to vote in the 2016 council elections.

Not every person who failed to vote will pay the $55 fine, an NSWEC spokesman said. "It should be noted that an Apparent Failure to Vote Notice is withdrawn if an elector provides a valid reason for not voting or if there has been an error in the marking of their name off the electoral roll."

The spokesman said 376,189 notices were issued for the 2016 council election, but more than 160,000 people (about 44 per cent) provided an acceptable excuse for their failure to vote.

More than half of the almost 600,000 people issued a notice following the 2012 council elections did not pay the fine after coming up with an excuse.

The NSWEC received $3.7 million in voting fines from the 2016 council elections, which goes into NSW consolidated revenue, before enforcement action was handed to Revenue NSW.

The failure to pay a fine in NSW may also lead to the suspension of a drivers' licence.

Mr Lee said he did not realise an election was held for the Inner West Council - formed in 2016 by the merger of the former Leichhardt, Ashfield and Marrickville councils - "because there's so little publicity".

Mr Lee said he would reluctantly pay the fine despite not realising voting in council elections was required.

"I don't think you should be forced to vote in them," he said.

Labor's local government spokesman, Peter Primrose, said forced council mergers had led to voter confusion and an increase in fines for not voting.

"I predicted that the confusion surrounding forced mergers, new boundaries and delayed elections would result in a greater number of people not voting, and raised the issue in [an] estimates [hearing] with then Premier [Mike] Baird, urging funding for more awareness programs and leniency for those who did not vote as a consequence of the confusion," he said.

Mr Baird conceded in the NSW Parliament in 2016 that council mergers had led to voter confusion: "There is some uncertainty because there are elections in one area and not necessarily another."

A spokesman for the Office of Local Government said it was the Electoral Commission's responsibility to conduct the council elections. "This included notifying relevant electors of the requirement to vote."

The NSWEC spokesman said: "A comprehensive information campaign was conducted to inform people in council areas having elections about their need to vote. This took into account the possible confusion caused by not all council areas holding elections.

"It should be noted that not knowing about the election is not an acceptable reason for failing to vote," he said.