NYS Posts Additional MCTMT Guidance
By Richard J. Koreto
Posted on 2/2/12

In Dec. 2011, Governor Cuomo signed a law that made modifications in the Metropolitan Commuter Transportation Mobility Tax (MCTMT). Although the Department of Tax and Finance announced these changes some weeks ago, it issued additional guidance on Jan. 26 in Technical Memorandum TSB-M-12(1)MCTMT, which provided more detail.

NYSSCPA member David S. Warshauer highlighted some of the key aspects of the memorandum:

Exempt Schools. The memorandum gave more details on which educational institutions are covered and specified that private schools instructing children in grades one and above are included in the exemption, as well as schools serving students with disabilities.

New Payroll Exemptions. Warshauer pointed out that the MCTMT tax applies to only those employers with payroll in excess of $312,500 in any calendar quarter—previously the floor was $2,500. It's also now a graduated tax, according to the table below:

No Self-Employed Rate Changes. These graduated rates do not apply to the tax on the self-employed—this remains at a flat 0.34 percent, said Warshauer. However, the floor has been raised from $10,000 to $50,000.

Basically, said Warshauer, the main beneficiaries of the changes are small businesses and the self-employed.

PrompTax Program Changes

Generally, employers whose aggregate tax withheld through Form NYS-45 is $100,000 or more have to use the state's electronic filing and payment program, PrompTax.

The memorandum says that because of the new thresholds, "certain PrompTax filers may not be able to determine at the beginning of a calendar quarter whether they will be subject to the MCTMT for that quarter, or which MCTMT rate will apply."

To help, the department has announced new policies, summarized below and explained fully in the memorandum.

• Employers may use their previous quarter’s payroll expense as a guideline. Therefore, employers whose payroll expense in the previous calendar quarter did not exceed $312,500 are not required to make MCTMT PrompTax payments in the current quarter. (However, employers whose actual payroll expense for the current quarter exceeds $312,500 must compute and pay the tax due with their quarterly return.)
• Employers whose payroll expense exceeded $312,500 in the previous quarter and who must make MCTMT PrompTax payments in the current quarter may use the MCTMT rate that applied to their payroll expense for that previous quarter to compute the MCTMT PrompTax payments due. At the end of the calendar quarter, employers must compute their actual MCTMT liability using the rate that applies to their actual payroll expense for that quarter.

The memorandum, which also has some examples, further notes that "employers who follow this policy will not be subject to any penalties for underpayment of MCTMT PrompTax payments."