|
Tax Memorandum
Date: October 2009
Subject: Recently Enacted New York
State Metropolitan Commuter Transportation
Mobility Tax
FOR YOUR IMMEDIATE ATTENTION
On March 21, 2009,
New York State enacted a new tax called the
Metropolitan Commuter Transportation Mobility Tax
(“MCTMT” or “MTA Tax”). All tax collected will be
designated solely for the specific purposes of the
Metropolitan Transportation Authority.
This is an employer
tax that is to be paid solely by an employer or
self-employed individual and is not to be
withheld from employees’ wages.
In this regard, it is
similar to unemployment tax without the associated
wage limits. The MTA Tax is imposed on an
employers’ payroll and the net earnings of
self-employed individuals engaged in business
within the metropolitan commuter transportation
district (“MCTD”).
Specifically, the
MCTD includes the counties of New York
(Manhattan), Bronx, Kings (Brooklyn), Queens,
Richmond (Staten Island), Rockland, Nassau,
Suffolk, Orange, Putnam, Dutchess, and
Westchester.
It is effective
beginning as follows:
¨
January 1, 2009 for self-employed
individuals
¨
March 1, 2009 for employers
(September 1, 2009 for school districts).
Self-employed
individuals include sole proprietors, LLC members
and partnership partners. To the extent that a
self-employed individual has employees, the tax is
also imposed on their payroll as an employer
(Note: the net pass-through income of an S
corporation is not considered net earnings
from self-employment).
The rate of tax is
.34% of an employer’s payroll and net earnings
from self-employment before reduction for
one-half of self-employment tax (“NESE”),
subject to the following thresholds (i.e. $340 per
$100,000 of payroll/NESE):
¨
Employer - $2,500 per quarter
¨
Self-employed - $10,000 per year
These thresholds
determine if tax is due and is not an exclusion.
This means that if an employer’s payroll for a
quarter is $2,500, no tax is due. If, however,
the payroll is, say $2,501, the tax is imposed on
the $2,501.
The initial employer
MTA return, Form MTA-305, is due
November 2, 2009, which is the same due date
as your other quarterly payroll tax returns.
It covers the period from March 1, through
September 30, 2009. Thereafter, the due dates
and quarterly periods of your MCTMT returns will
correspond with those of your other payroll tax
returns.
Self-employed
individuals must make quarterly estimated payments
on Form MTA-5. For 2009, the amount of the
payments is to be based on ten-twelfths (10/12ths)
of estimated NESE. This effectively taxes the
same period as employers from March 1, 2009
through December 31, 2009.
The initial
self-employment estimated tax payment voucher,
Form MTA-5, is due November 2, 2009.
The initial payment is to be equal to 75% of
ten-twelfths of 2009 estimated NESE. The
remaining 25% is due February 1, 2010.
For tax years
subsequent to 2009, quarterly estimated payments
are due on April 30, July 31, October 31, and
January 31 (Please note that these due dates do
not correspond with your estimated income
tax vouchers).
In addition, a
self-employed individual must also file an annual
reconciliation return on Form MTA-6. This
return will be due April 30, 2010 for most
taxpayers. The MTA-6 will reconcile the
difference between actual and estimated NESE.
Partnerships, LLC’s
and LLP’s may elect, on Form MTA-599, to
file estimated payments and annual returns on a
group basis. The election must be made by March
15, 2010. In doing so, the group will fulfill the
estimated tax and filing requirements of its
partners. The group return is filed on Form
MTA-505 and is due on April 30th
following the close of the tax year. The group
estimated payments are filed on Form
MTA-5 (the same as for individuals). Partners
and members may elect to be included in the
partnership/LLC/LLP group by April 30th
following the close of the tax year.
All of this may
appear voluminous and confusing. However, it is
our intention to make this as pain free as
possible. If you are organized as a corporation
and utilize the services of an outside payroll
service such as ADP or Paychex, the MTA payroll
tax filings will be prepared by them.
As a corporation, if
you do not utilize the services of an outside
payroll service, we will prepare the necessary
filings and submit them to you together with your
other quarterly payroll tax returns.
If you are
self-employed as discussed above, only the
employer payroll tax portion of your MTA Tax
obligation will be fulfilled on Form MTA-305 (whether
prepared by us or your payroll service). The NESE
portion of the MTA Tax [the quarterly estimated
MTA-5 as well as the annual MTA-6
(individuals) or MTA-505 (group)] will be
prepared by us. In connection therewith, we will
be in contact with you in the coming weeks.
If you should have
any comments or questions, please do not hesitate
to contact us.
Very truly yours,
Demasco, Sena & Jahelka, LLP
Click HERE to go to the NYS
Div of Tax & Finance for more instructions |
Staff Login
