January 21, 2014

New York's Metropolitan Commuter Transportation Mobility Tax Upheld

Related Service Tax & Business

New York's Metropolitan Commuter Transportation Mobility Tax Upheld Tax & Business
New York’s Metropolitan Commuter Transportation Mobility Tax Upheld

On January 14, 2014, the New York Court of Appeals, the state’s highest court, declined to hear a challenge to the Metropolitan Commuter Mobility Tax, the payroll tax levied in counties served by the Metropolitan Transit Authority. The decision permits the continuance of the tax, which was enacted in 2009, and helps fund the region’s mass transportation.

The tax is imposed on certain employers, self-employed individuals and partners in a partnership conducting business within the Metropolitan Commuter Transportation District, including the counties of Duchess, Orange, Putnam, Rockland, Westchester, Nassau, Suffolk and the boroughs of New York City.

Local county executives have fought hard to reverse this tax declaring it an undue burden on local businesses, especially those whose employees never use MTA services such as railroads, subways and buses. The MTA states that the fees are necessary to reduce costs. The tax imposes an up to 34-cent tax for every $100 of payroll for large companies with an annual payroll more than $1.25 million and on self-employed individuals and partners.

This tax was first challenged in August 2012 when the New York State Supreme Court found the tax unconstitutional. New York State immediately appealed this decision and in June 2013 the New York Appellate Court reversed the Supreme Court finding the tax to be constitutional. The final appeal to the Court of Appeals and their decision to not hear the case, essentially leaves the tax as a valid tax and good law. All taxpayers and employers must continue to comply with this law as it is in full force and effect.

The State had previously implemented a streamlined appeal process to handle protective refund claims that were anticipated as uncertainty about this tax continued during the appeals process. All of these claims are now null and void.

Please contact your Marcum SALT professional with any questions concerning this tax.