Tax

Tax Environment

The tax environment for businesses in New York City is extremely complex and ever-changing. In addition, New York competes with neighboring New Jersey and Connecticut for business, so various incentive programs are continually being developed and re-vamped. It is essential to find a tax expert if you are doing business in the area.

A good place to find information regarding how and where to file tax returns, penalties and extension requests is NYBIZTAX. New York City businesses must comply with city, state and federal tax laws. To reduce the burden of dealing with three separate bureaucracies, the New York City Department of Finance, New York State Department of Taxation and Finance, and the United States Internal Revenue Service have joined to create NYBIZTAX, a consolidated index of links to important city, state and federal tax information. Here you will also find an alphabetical directory of links to websites designed to be of help to New York City businesses.

For a listing of business corporation forms and documents filing information go to the New York Department of State website.

The Department of Finance has published a complete listing of all important real estate, business, and excise tax dates on one convenient reference page:

 www.nyc.gov/html/dof/html/taxcal2003.html

-top-

Business Tax

The following taxes and fees may relate to your New York City based business:

• Sales and Related Taxes (State and City). Both New York State and City impose a tax on the sale or use of various items. The New York City rate is 4.6%; New York State imposes an additional 4%. Call 1 800 CALL-TAX (225 5829) for information and call 1 800 462 8100 for forms
   
• Commercial Rent Tax (CRT). CRT has been eliminated in four boroughs and now is imposed only in Manhattan south of 96th Street for commercial activity, where annual base rent is $100,000 or more, before the 25% rent reduction. Businesses are required to file the three Quarterly Returns using (FORM NYC-CR-Q) and the Annual Return (Form NYC-CR-A). Tax forms and filing instructions are available from the Department of Finance website. All Businesses in Manhattan south of 96th Street with annual rents exceeding $75,000 or those businesses receiving over $75,000 in rent from any subtenant must file an annual CRT return (Form NYC-CR-A), even those with no tax liability. Current tax rate is 6% of the taxpayer's base rent, with sliding credit for base rents below $140,000, before the 25% rent reduction.
   
• Real Estate Tax and Related Charges. If a retail business owns the building in which it operates, it is subject to real estate and other related charges. To register to receive bills, complete an owner’s registration on-line at the Department of Finance website. Real estate taxes are based on an annual assessment.
   
• Unincorporated Business Tax (UBT). Imposed on taxable income of every unincorporated business in NYC, including those conducted by individuals and partnerships. For taxable years beginning after 1996, NYC tax return must be filed by a partnership if it has either total gross income of more than $25,000, prior to any deduction for cost of goods sold or services performed, or unincorporated business taxable income of more than $15,000. Other taxpayers must file if their gross income exceeds $75,000 or their taxable income exceeds $35,000. Forms and filing are available from the Department of Finance website. The UBT is computed at 4% of taxable business income.
   
• General Corporation Tax (GCT). This tax is imposed annually on corporations doing business in the City in a corporate or organized capacity. Forms can be obtained and filed from the Department of Finance website. The GCT is computed by four different methods; one of which is the minimum tax of $300. Two of the other methods are "entire Net Income" and "Alternative Tax" which are taxed at 8.85%. "Total Capital" the final method, is taxed at 15%.

You may also be obliged to pay Commercial Motor Vehicle Tax. This is imposed on the use of commercial non-passenger motor vehicles, such as trucks and delivery cars used principally within the city and motor vehicles used for the transportation of passengers on a regular basis, whether owned or leased. The owner must affix a sticker to the motor vehicle to show payment. To receive an annual bill, send a letter stating business name, address, telephone number and contact name, along with a copy of the vehicle registration, to:

NYC Department of Finance
CMVT Section
210 Joralemon Street, 1st Floor
Brooklyn, NY 11201
www.nyc.gov/html/dof/home.html

The amount of tax due depends upon the vehicle type

-top-

Personal Tax

Most transferees in the US are categorized as resident aliens (non-resident aliens have to spend 330 days a year out of the country). Resident aliens generally are subject to the same tax laws as American citizens and are required to report and pay tax on all income earned worldwide. Income must be reported for each calendar year and your tax return and any tax owed are due by April 15 of the following calendar year.

The majority of your income taxes are withheld from your pay check and paid directly to the government by your employer. In order to pay taxes, you will need a social security number which both you and your employer will use on the tax forms.

You can get a social security number from your local Social Security Administration office or by calling the SSA at +1 800 772 1213. Some resident aliens who do not qualify for a social security number must use an Individual Taxpayer Identification Number (ITIN). You can apply for this using IRS Form W-7.

In the US, personal income is taxed on a graduated basis, i.e. the more you earn, the more you pay. The lowest rate is 10% for a single person earning between $6,000-$28,399; the highest rate is 38.6% for married couples with an income of more than $311,951. This is for federal taxes, but you must also pay state and local taxes (to the State of New York and the City of New York), most of which are withheld from your pay check.

For more information on New York taxes, go to www.tax.state.ny.us. You will have two tax forms to fill out - one for the federal government and one for the state (which also includes reporting to the City of New York).

For further assistance in paying income taxes:

Manhattan Taxpayer Assistance Center

86 Chambers Street, 2nd Floor
New York, NY 10007-1826
Tel: +1 800 225 5829 (For information and questions)
Tel: +1 800 462 8100 (To order forms)
Tel: +1 518 485 6800 (To telephone from outside the US)
Walk-in assistance and forms available Mon-Fri from 09:00-17:00

-top-

Sales Tax

To deal with the budget deficit caused by the 9/11 attacks and the resulting increase in security, Mayor Bloomberg raised the sales tax in New York City from 8.25% to 8.6%. The sales tax consists of a 4% state tax and 4.6% city tax. To quieten the outcry, there will be two sales tax-free weeks this year when all clothing costing less than $110 will be exempt. These weeks will be planned around the Labor Day Holiday in September and Martin Luther King Day in January.

Sales tax is not included in the marked price of an item. It is calculated on top of the list price. Sales tax is levied on sales of cosmetics, gas, electricity, and intrastate telephone and telegraph services, food and beverages sold by restaurants and caterers, hotel and motel rooms, admission to certain amusements and club dues. No sales tax is charged on clothes and shoes valued at less than $110.

Exemptions include food, rent, prescription and non-prescription drugs, newspapers and periodicals, and public transportation. Cigarettes are taxed at $1.50 a pack and the gasoline tax is 22.6 cents per gallon.

-top-