Press Room: Tax Release

August 31, 2012

Metropolitan Transportation Commuter Mobility Tax Held Unconstitutional…

Protective Refund Claims Should Be Filed

On August 22, a New York Supreme Court Judge ruled that the much reviled Metropolitan Transportation Commuter Mobility Tax (MCTMT) was improperly enacted into law in 2009, and thus, deemed to be unconstitutional. The plaintiffs, various county officials, and businesses within the 12 county metropolitan commuter transportation district successfully argued that the enactment of the law failed to meet the State’s constitutional requirement for passage of a special law in that it was not enacted with a “home rule message” or by one of the exceptions to the home rule requirement (i.e., a two-thirds majority vote in both the State Senate and Assembly).

What is particularly noteworthy about the recent ruling is that it goes against rulings made in other judicial venues by similarly situated plaintiffs asserting similar arguments. Hence, there has been some prognostication within the practitioner community that the recent ruling will be overturned at the appellate level or, ultimately, at the Court of Appeals (New York’s highest judicial court).

However, as it stands now there may be a potential refund opportunity for taxpayers that have paid the tax since its inception.  

MCTMT returns are filed on a quarterly basis for most taxpayers. The tax was enacted in April of 2009 and made retroactive to March 1, 2009. Under special filing provisions for the 2009 tax year, the first MCTMT tax return was not due until November 2, 2009 (October 31 fell on a Saturday). Since the MCTMT law incorporates the procedural provision under Article 22 (personal income tax) of the tax law, there is a three-year statute of limitations for filing a refund claim. Therefore, protective refund claims should be filed prior to November 2, 2012, as a final decision on the constitutionality of the MCTMT will not likely be made before that date.

If you believe you may be affected by this notice, please contact your WTAS tax advisor as soon as possible.