Long Island Small Businesses and the Onerous MTA Payroll Tax

I confess, I only incorporated my business this past year.  For a solo attorney such as myself, there aren’t as many reasons to incorporate as there are for other businesses.  I have malpractice insurance that covers most of my liability, and a corporation or LLC formation would offer little in the way of additional protection.  So, I was quite surprised when my accountant sent me a form and invoice for the MTA tax.

The tax is formally known as the Metropolitan Commuter Transportation Mobility Tax (MCTMT).  Besides the cost of paying the tax, there is no simple way of tacking on the tax to your other tax filings.  Aside from the usual federal and New York state tax forms, these additional forms must be filed quarterly.

This tax is imposed on certain employers and self-employed individuals engaging in business within the Metropolitan Commuter Transportation District (MCTD). Specifically, the tax applies to (1) employers required to withhold New York state income tax from employee wages and whose payroll expense exceeds $2,500 in any calendar quarter, and (2) individuals with net earnings from self-employment allocated to the MCTD that exceed $10,000 for the tax year (according to the Department of Taxation and Finance, this includes partners in partnerships and members of a limited liability company (LLC) treated as a partnership).

The small business owner cannot withhold any of the tax from the employee’s compensation.

The recently elected Governor Cuomo has come out  in opposition to this tax, calling it “onerous.”

Small businesses on Long Island pay $3.40 for every $1,000 of payroll. If you are a small Long Island business, you are probably not using the LIRR to commute, and your customers are probably not taking the MTA to see you.

This tax is burdensome to Long Island small businesses and is not proportional to their use of the MTA.

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