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New York’s Metropolitan Commuter Transportation Mobility Tax Held Unconstitutional – Potential Tax Refund Opportunity – Action Needed By November 2, 2012

October 22, 2012

Tony Switajewski, CPA
Partner

If you had or have employees working or are self-employed (including partners in a partnership or members in a limited liability company with self-employment earnings) doing business in New York’s Metropolitan Commuter Transportation District (MCTD), a potential tax refund opportunity may be available.

A New York court recently ruled that the Metropolitan Commuter Transportation Mobility Tax (MCTMT) was unconstitutionally passed by the New York Legislator (Mangano, et al. v. Silver, et al., N.Y. S. Ct., No. 14444/10, 08/22/2012).  The payroll type tax applies to certain employers and self-employed individuals engaging in business within New York’s MCTD which includes New York City [the counties of New York (Manhattan), Bronx, Kings (Brooklyn), Queens, Richmond (Staten Island)], and the counties of Rockland, Nassau, Suffolk, Orange, Putnam, Dutchess and Westchester).  The tax was enacted and effective in 2009.

Since the court’s determination is currently being appealed, the New York Department of Taxation and Finance advises that taxpayers who are subject to the tax should continue to pay it and file the required returns; otherwise, penalties may be imposed.

However, with respect to back years (2009 and forward) in which taxpayers paid the tax, taxpayers should consider filing protective refund claims in order to prevent any portion of the tax from being barred by a three-year refund claim statute of limitations.  No tax refunds will be issued unless a refund claim is timely and properly submitted and only if and when the constitutional issue is ultimately resolved against the Metropolitan Transportation Authority.

In general, taxpayers that have been paying this tax as an employer, with respect to the first return due in 2009, must file a refund claim on or before November 2, 2012.  Self-employed individual taxpayers generally have until April 30, 2013 (with respect to 2009).

If you would like assistance with filing protective refund claims, please contact us at info@blumshapiro.com.

 

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