MTA tax refund deadline prompts 244,000 business requests

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)

Nearly a quarter million businesses have asked to get back money they've kicked in over the past three years to pay a tax that helped the Metropolitan Transportation Authority close a gaping hole in its cash-pinched budget.

The state Department of Taxation and Finance has received 243,947 protective claims before Wednesday's deadline for businesses seeking refunds of the money they shelled out for the Payroll Mobility Tax.

Enacted in 2009 as part of a state bailout of the MTA, the PMT hit businesses in the MTA's region with a tax of 34 cents for every $100 of payroll.


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Republican state lawmakers have derided the tax as "a job killer" while the MTA said losing the $1.8 billion that it pours into the MTA budget every year would lead to drastic cuts and fare hikes.

"We would be not only looking at reductions in service but we'd have to look at fare increases that I think would be so severe that it might actually make the tax look better in comparison," MTA chairman Joseph Lhota told a meeting of Westchester business leaders in September.

A dozen suburban counties -- including Westchester and Putnam -- challenged the tax in court on behalf of taxed businesses, leading to a Long Island judge's decision in August declaring the tax unconstitutional.

However, state Supreme Court Justice Bruce Cozzens has allowed the MTA to continue collecting the tax while the MTA pursues an appeal.

The MTA was turned down recently when it sought permission to appeal the case to the state's highest court, the Court of Appeals. But Marjorie Anders, a spokeswoman for the MTA, said "the appeals process continues." In the end, it is likely that a lower level appellate court will hear the case.

State tax officials are warning refund seekers that it's likely the decision will be overturned. Similar legal challenges have already failed, they say.

"We're very confident that it will be overturned and that it will not be found unconstitutional," said Geoff Gloak, a spokesman for the tax department.

New York has a three-year statute of limitations for filing amended tax returns. The deadline was originally Nov. 2 but was pushed to Nov. 14 because of Hurricane Sandy. There are indications that the deadline could be extended through the end of the month, state sources say.

By filing a protective claim, businesses preserve their right to a refund while the issue of the law's constitutionality is resolved in the courts.

The Citizens Budget Commission warned in September that if the tax is eliminated, some $459 million that suburban counties add to the MTA budget annually would be lost. The CBC predicted that fares on Metro-North would jump 32 percent while LIRR riders would see a 46 percent increase.

For information about filing a protective claim, go to the state Department of Taxation website at http://www.tax.ny.gov/.

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