Are taxpayers required to continue to pay the tax in view of the recent court ruling?
All taxpayers who have been paying this tax remain subject to the tax and are required to continue to pay the tax and file the required returns. As with other taxes, failure to make the tax payments and file required returns could subject a taxpayer to penalties. The constitutionality of the MCTMT has been challenged in a series of lawsuits. In all of these lawsuits in which there has been a decision, the MCTMT has been ruled to be constitutional. While a Nassau County Supreme Court justice in one of the challenges found the MCTMT to be unconstitutionally enacted, that decision was recently overruled by the Appellate Division. The Appellate Division concluded that the statute was properly enacted, and the Court of Appeals has dismissed Nassau County's appeal. While there is still one case where the litigation is not concluded, we anticipate that the tax will be upheld. The tax is still in effect. If this requirement to pay the tax and file returns were to change, the department will notify taxpayers.
What if the tax is ultimately declared unconstitutional? Will I be able to get my money back?
It will of course depend on the judicial decision, but rest assured that procedures of the Department of Tax and Finance will permit taxpayers to submit claims for tax refunds, and those procedures would encompass claims for refunds based on the asserted unconstitutionality of a tax. Generally, in order to receive a tax refund when a tax has been declared unconstitutional, a claim for refund must be filed. Generally, a claim for refund must be filed within three years of when you filed your tax return. Payment of the MCTMT first commenced only in November, 2009, so at present, no refund claim for any period of payment of this tax must be presented until November 2, 2012, to prevent the claim from being barred by the three year deadline.
What is a protective claim?
A protective claim is a refund claim that's 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. Filing a protective claim protects your right to a refund regarding the unresolved issue, in the event the issue ultimately is resolved in a way that gives rise to a right to a refund after the normal time period allowed to file for a refund has expired.
Should I file a protective claim?
While we're confident that the MCTMT is constitutional and the decision will be overturned, you have the right to file a protective claim. The Department of Taxation and Finance would process any claims founded upon the unconstitutionality of the MCTMT once the constitutional issue has been resolved through the conclusion of the appellate process. 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.
How to file a protective claim
There are three options that you can use to file a protective claim:
- If you have an Online Service account, login and file through your services menu
- Complete an electronic form
- Call an automated telephone application (518-485-2392)
If you have any trouble using one of these options, we will provide telephone assistance to ensure your refund claim is properly filed.
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) Note: This deadline for filing a protective claim has been postponed to November 26, 2012 for taxpayers directly affected by Hurricane Sandy. See Hurricane Sandy tax relief for more information.
- April 30, 2013 (self-employed individuals)
- If you don't file a protective claim for a refund of MCTMT by these dates, you may still file a protective claim for a 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 don't 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 prior 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 identification number assigned to the Partnership for group filings.