New York MTA Payroll Tax Upheld by State's Highest Court

Author: Rena Pirsos, XpertHR legal Editor

UPDATE: On January 14, 2014, the New York Court of Appeals declined to review its prior decision upholding the MTA Payroll Tax as constitutional. Therefore, the tax stands and protective refund claims that were filed will not be processed.

October 10, 2013

New York's highest court has upheld the constitutionality of the Metropolitan Commuter Transportation Mobility Tax (MCTMT or MTA Payroll Tax). Mangano v. Silver, 107 A.D.3d 955 (N.Y. App. Div. 2d Dep't 2013). Accordingly, the tax remains in effect and employers should continue to pay it and file required returns.

The MTA Payroll Tax is an employer-paid tax; no amount is deducted from employees' wages. It applies to certain employers engaged in business within the Metropolitan Commuter Transportation District (MCTD), which comprises the following New York counties:

  • New York (Manhattan);
  • Bronx;
  • Kings (Brooklyn);
  • Queens;
  • Richmond (Staten Island);
  • Rockland;
  • Nassau;
  • Suffolk;
  • Orange;
  • Putnam;
  • Dutchess; and
  • Westchester.

No tax exemptions allowed by any other New York state law apply to this tax and no tax credits may be used to reduce the amount of tax due.

In October 2012, while the Mangano case and other litigation was ongoing, the Department of Taxation and Finance (DTF) had advised employers that they could file protective refund claims to prevent potential refunds from being time-barred by the statute of limitations in case the tax was found to be unconstitutional on appeal.

The DTF has updated its website for the benefit of employers that have electronically filed protective claims for a refund of the MTA Payroll Tax paid in prior periods. "While there is still one case where the litigation is not concluded, we anticipate that the tax will be upheld," the website states.