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EZKR News & Events
August 28, 2009
What's New in Tax Law... In New York State
By Barbara Bel, CPA - A tax partner at EZKR, Barbara is president of The New York State Society of CPAs-Westchester Chapter.
New York State and New York City enacted several new tax laws in 2009 that affect almost everyone - individuals as well as businesses. Some of these changes required action in June, with the payment of the second NYS estimated tax payment, and some require action later in the year
Metropolitan Commuter Transportation Mobility Tax (MCTMT) - The MCTMT is a new law imposed on employers paying employees more than $2,500 in any calendar quarter. It also affects self-employed individuals and partners in a partnership or member of an LLP or LLC who have net earnings from self-employment allocated to the MCTD that exceed $10,000 for the year. The MCTMT area covers business within Dutchess, Nassau, Orange, Putnam Rockland, Suffolk, Westchester and all five boroughs of NYC. The tax is calculated at .34% of taxable wages and the effective date is March 1, 2009. The first payment is due November 2, 2009. Individuals who will owe MCTMT are required to make estimated tax payments and employers can pay online or with Form MTA-305.
NYS Sales Tax Re-registration - The 2008 Sales and Use Tax Budget Legislation calls for the creation of a sales tax vendor re-registration program. A new NYS Certificate of Authority must be obtained for all vendors for sales tax purposes. However, vendors cannot submit a re-registration form until they receive a notification letter from NYS. The program began on November 1, 2008 and all vendors will be contacted randomly by March 31, 2012. Do not ignore these letters.
NYS Personal Tax Rate Increase - In May, 2009, a Notice was issued by the New York State Department of Taxation and Finance which notified recipients of the recent changes in NYS tax laws. As a result of the new tax laws many tax filers might have underpaid their 2009 personal income tax estimated tax because they were unaware of the changes when filing in April. The changes are as follows: Itemized deductions may not be claimed, aside from charitable deduction, for individuals in both New York State and New York City with adjusted gross income over $1 million. For tax filers with taxable income over $500,000, the personal income tax rate increased to 8.97%. For those married and filing jointly with taxable income over $300,000, individuals with taxable income over $200,000, and heads of household with taxable income over $250,000 the personal income tax rate increased to 7.85%. In order to avoid being penalized, the estimated tax for 2008 must be computed using the revised 2009 rates and itemized deduction laws.
Empire Zone Re-Certification - The Tax Law and General Municipal Law of 2009 has been amended to affect the Empire Zones Program and tax payers claiming Empire Zone credits are directly affected by the changes. Empire State Development will review each Empire Zone enterprise according to the amended criteria and will reissue certification only if the enterprise meets the new guidelines. Empire Zone credits can only be applied to tax return filed after January 1, 2008 with the recertification attached. Enterprises who do not receive certification will be contacted with the reasons they failed to meet the new criteria and the appeals process. All previously filed tax returns which have claimed Empire Zone credits must be resubmitted with the inclusion of an Empire Zone retention certificate. It is not sufficient to send the retention certificate without a tax return attached.
Partnership Filing Fees - The Tax Laws of 2009 have instituted an additional filing fee for partnerships, excluding LLPs, LLCs treated as partnerships, and LLCs that are disregarded entities. The filing fee will only be applicable for partnerships with New York source gross income of $1 million and over. The fee for partnerships whose source gross income is exactly $1 million must pay a fee of $500, for those who earn more than $1 million but not over $5 million the fee is $1,500, more than $5 million but not over $25 million has a fee of $3,000, and for more than $25 million the fee is $4,500. The fee must be paid 30 days from the end of the partnership’s tax year. Additionally, income tax credits cannot be applied against the fee as the fee is based on gross income.
New York City Tax Changes - The New York State legislature passed a bill which changes several tax laws, most importantly sales tax. As of August 1, 2009, New York City sales tax increased from 4% to 4.5%, and the total sales tax rate in NYC is 8.875%. In addition, there is no longer a sales tax exemption in NYC for clothing items over $110. Also, after the 2008 tax year, the general corporation tax will change from a $300 fixed minimum tax to a range based on receipts in NYC spanning from $25 to $5,000. Other changes are: a voluntary disclosure and compliance program was created and a single sales factor will be phased in for general corporation and unincorporated business tax.
