As previously reported, a New York Supreme Court judge in Nassau County recently held that the Metropolitan Commuter Transportation Mobility Tax ("MTA payroll tax") was unconstitutional, based in part on the limited applicability of the MTA tax.  This determination is being appealed by the State of New York and MTA.  During the appeal process, the MTA tax will continue to be in effect.  If the MTA tax is ultimately found to be unconstitutional, a claim for tax refund must be filed within the three-year statutory period.

Filing Protective Refund Claims

To protect your right to receive a refund of any MTA tax paid, it will be necessary to file a protective refund claim.  A protective claim is a refund claim that is based on an unresolved issue (for example, a tax being found unconstitutional), filed for purposes of preserving the claim against being time barred pending the resolution of the issue.  In the event the constitutional issue is not resolved prior to November 2, 2012, and you made tax payments on or before November 2, 2009, a protective claim needs to be filed on or before November 2, 2012.

There are three options that you can use to file a protective claim:

• If you haven an online account, login and file through your services menu
• Complete an electronic form
• Call in an automated telephone application (518-485-2392)

There is no paper refund claim option.  Do not file a protective claim for refund by amending your MCTMT return(s).  An amended return is not a valid protective claim for refund.  If one was already submitted, you should re-file using one of the above options.

When to File Your Protective Claim

File your protective claim for the initial filing period on or before:

• November 2, 2012 (employers)
• April 30, 2013 (self-employed individuals) 

If you do not file a protective claim for refund of MCTMT by these dates, you may still file a protective claim for refund after these dates.  However, the protective claim will only apply for the filing periods that are still within the statute of limitations.  That period is generally within three years from the date you filed the return or within two years from the date you paid the tax, whichever is later.  

You do not need to file a protective claim with regards to the unconstitutionality of the MCTMT for each filing period for which you paid or will pay the tax.  Once filed, your protective claim applies to all prior filing periods that are within the statute of limitations when the claim is filed and any future filing periods.  For example, a protective claim filed by an employer on or before November 2, 2012, will apply to all periods and future filings of the MCTMT.

Protective Claims for Individuals Who Filed as Part of a Group Return

Partnerships may file one protective claim on behalf of all the qualified partners previously included on the partnership's group MCTMT return(s) (Form MTA-505).  File the claim using either the electronic form or  automated telephone application options.  You will select individual, enter the group name, and use the special MCTMT indentification number assigned to the partnership for group filings.

If you have any questions regarding the protective claim procedure, please contact your DDK tax professional.