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NEW YORK MOBILITY TAX

Impact on employers and self-employed in the
City Metropolitan Commuter Transit District

Effective for wages paid after February 28, 2009, the State has enacted a new payroll tax of 0.34% ($3.40 per $1,000) if the employee’s wages exceed $2,500 in the calendar year. The tax also applies to self-employment income per year derived from the Metropolitan Commuter Transit District (MCTD) in excess of $10,000 and is calculated at 10/12ths of the net earnings for 2009.

If a partnership (including an LLC treated as a partnership) is doing business within the MCTD, each partner will be subject to the Metropolitan Commuter Transportation Mobility Tax (MCTMT) based on his or her share of the partnership’s net earnings from self-employment allocated to the MCTD if his or her net earnings from self-employment allocated to the MCTD is more than $10,000 for the tax year. The partnership must provide either the actual amount of net earnings from self-employment allocated to the MCTD or the allocation percentage to each partner so that the partner can determine the amount of the MCTMT due.

Special rule for tax year 2009. The initial estimated MCTMT payment is due by November 2, 2009 (due to October 31, 2009 falling on a Saturday) and must include each partner’s total estimated tax due for the period January 1, 2009 through September 30, 2009.

Initial Year Penalties: For the partner to avoid a penalty for underpayment of the MCTMT for the tax year, the partner’s total amount of MCTMT payment(s) must be at least 90% of the amount of the partner’s MCTMT due for the tax year; or 110% of the MCTMT reported for the partner for the prior tax year (if the partner’s net earnings from self-employment allocated to the MCTD for the prior year is more than $150,000). However, this rule does not apply for tax year 2009.

There will be no penalty for the underpayment of estimated tax for periods prior to October 31, 2009, provided the partner’s total estimated tax due for the period January 1, 2009 through September 30, 2009 is included in the October 31st payment.

For more information, please contact a member of EisnerAmper's State and Local Tax Group:


Gary C. Bingel J.D., CPA, MBA

Partner

Any tax advice in this communication is not intended or written by EisnerAmper to be used, and cannot be used, by a client or any other person or entity for purposes of (i) avoiding penalties that may be imposed on any taxpayer or (ii) promoting, marketing or recommending to another party any matters addressed herein.

All information provided is of general nature and is not intended to address the circumstances of any particular individual the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation.

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