MTA payroll tax: Tight window for refunds

Passengers run to board a New York City

Passengers run to board a New York City bound Metro-North train at the Port Chester train station. (Feb. 10, 2012) (Credit: Rory Glaeseman)

It may be several months before an appeals court decides whether the controversial MTA payroll tax stays or goes, but business owners still have to act fast if they eventually want to get back all the money they've paid toward the tax, officials said.

Last month, a State Supreme Court justice ruled in favor of Westchester, Putnam and other counties in a suit they filed looking to repeal the Metropolitan Transportation Authority's Payroll Mobility Tax. Although the decision declared the 2009 tax unconstitutional, it remains in place as the state's highest court considers appeals from the MTA and the state.

But because there is a three-year statute of limitations in New York to file an amended tax return, employers have only until Nov. 2 to formally stake their claim to get back the money they paid in the tax from March 2009 to September 2009.


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New York State Department of Taxation and Finance spokesman Geoff Gloak said the state is developing "an easy process for taxpayers to file a protective claim for refund, which we expect to be available in early October, well before the first deadline."

Gloak said business owners should not file amended tax returns to get the refunds. But not waiting for the state to come up with its plan, some accountants and payroll administrators are having their clients do just that.

"If they repeal it retroactively, you'd have to file amended returns to get refunds," said Carmine Filippone, a certified public accountant with Rudinger, Heller & Filippone in White Plains. "Generally speaking, three years is the time you have to file amended returns."

Ralph Accardo, president of Accu Data Payroll of Hicksville, said he is prepared to file amended returns on behalf of about 600 New York businesses his company represents. Some of those clients would be due back as much as $20,000 just for the first six months that the tax was in effect.

Accardo said the refund process is the latest headache caused by the tax, which charges business 34 cents for every $100 of payroll.

"It's been a real pain in the neck for people -- especially those that don't have any employees that use mass transit to get to work," Accardo said.

The tax was created as part of a $2.3 billion state bailout of the MTA as it faced a record deficit. In 2011, certain small businesses and private schools were exempted from paying the tax.

MTA chairman and CEO Joseph Lhota warned that if a judge's ruling declaring the Payroll Mobility Tax unconstitutional is allowed to stand, service cuts and fare and toll increases will be needed to bridge the $1.8 billion hole in the agency's budget.

The MTA has said similar lawsuits filed by other municipalities challenging the constitutionality of the tax have been dismissed.

Robert Spielman, a partner in the Melville-based accounting firm Marcum LLP, said he expects many businesses won't bother to stake their claim for the money they could be owed, either because they're not aware of the process or because they assume the court's ruling will be reversed and the tax will stay in place.

"It's not a huge deal to file an amended return," Spielman said. "But some people just don't want to go through the expense. They say it [the ruling] is never going to be upheld anyway."

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