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MCTMT Amended for 2015 - Resident Partners Must Pay Tax on Their Own

Wayne Berkowitz, CPA, J.D., LL.M. 02.23.2015 | Practice Made Perfect Alert

Many law firm partners are now receiving notices informing them of their 2015 responsibilities in paying the Metropolitan Commuter Transportation Mobility Tax (MCTMT).  As we noted in the September 2014 issue of Practice Made Perfect, effective for tax years beginning on or after January 1, 2015, law and other partnerships can only make MCTMT payments on behalf of nonresident partners. Resident partners must now pay the MCTMT on their own behalf.

Individuals, including partners in partnerships and members of LLCs that are treated as partnerships for income tax purposes, who have net earnings from self-employment allocated to the Metropolitan Commuter Transportation District[1] (MCTD) are subject to the MCTMT at a rate of 0.34%. For tax years beginning prior to January 1, 2015, partnerships were permitted to file a group return on behalf of both their New York resident and nonresident partners and pay the MCTMT on behalf of the partners that elected to be included in the group.

Fortunately, the new rules have made this somewhat simpler for resident taxpayers to comply. Beginning with the MCTMT payment due on April 15, 2015, resident partners will submit the estimated MCTMT payments along with their Income Tax estimates on Form IT-2105. Correspondingly, the remaining three estimates will also be filed and paid with the Income Tax on June 15, September 15 and January 15. The tax will be reported and reconciled on the annual Personal Income Tax Return. Note that nonresidents who do not elect to be included in a partnership’s group return will follow the same procedures.

Group returns are still permitted to be filed on behalf of the qualifying nonresident electing partners. If an election is made, the partner need not file and/or pay the MCTMT on his own behalf. Be aware that nonresident partners must be in a group return for both the MCTMT and income tax purposes or not at all. Estimated payments for the group returns will be made combined to include both the Income Tax and MCTMT. Due dates of the estimates will be April 15, June 15, September 15, and January 15.

Law firms must notify resident partners of these new requirements and must seek elections from nonresident partners who wish to participate in group returns.

Questions? Contact your Berdon advisor or Wayne Berkowitz at 212.331.7465 | wberkowitz@berdonllp.com.

[1] The MCTD includes New York City [the counties of New York (Manhattan), Bronx, Kings (Brooklyn), Queens, Richmond (Staten Island)], and the counties of Rockland, Nassau, Suffolk, Orange, Putnam, Dutchess, and Westchester.

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