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Multistate Tax Alert: New York’s Highest Court Lets Stand Lower Court Decision

Finding metropolitan commuter transportation mobility tax constitutional



On January 14, 2014, the New York Court of Appeals (the “Court of Appeals”) declined to hear the second of two appeals1 that challenged a decision by the Appellate Division of the New York State Supreme Court (“Appellate Division”) upholding the constitutionality of the Metropolitan Commuter Transportation Mobility Tax (“MCTMT”).2 In this Tax Alert we summarize the MCTMT, the court proceedings and some taxpayer


The MCTMT is imposed on certain employers and self-employed individuals (including partners in partnerships and members of limited liability companies that are treated as partnerships). It generally applies at a rate of up to 0.34% on compensation paid to employees based in the Metropolitan Commuter Transportation District (“MCTD”) and on self-employment income sourced to the MCTD.3 The tax became effective March 1, 2009, and its revenue is dedicated to the New York State Metropolitan Transportation Authority. The tax is administered under procedures similar to those of the New York State personal income tax.

Summary of the Lower Court proceedings 

Article IX, Section 2(b)(2) of the New York State Constitution (the “Home Rule Clause”) normally prevents the State’s Legislature from enacting laws affecting “the property, affairs or government” of local governments.However, an exception to the Home Rule Clause exists for special laws that serve a substantial state concern. Citing this exception, the Appellate Division held that due to the importance of mass transit to the health of both the New York City region and entire New York State economy, the MCTMT fulfilled a substantial state concern and, accordingly, its enactment was not in violation of the Home Rule Clause.4 The Court of Appeals, by declining to hear the appeals, let stand the Appellate Division’s decision upholding the constitutionality of the MCTMT.

Taxpayer considerations

Since the New York State Department of Taxation and Finance (the “Department”) has continued to collect the MCTMT while this matter was under appeal, taxpayers who are in compliance with the MCTMT provisions should not be affected by the ruling. Based on the Appellate Division’s decision, which the Court of Appeals let stand, protective refund claims filed by taxpayers in the procedure established by the Department5 will not be granted.


If you have questions regarding this court decision or other New York tax issues, please contact any of the following Deloitte Tax professionals.

Russell Banigan
Deloitte Tax LLP, Jericho
(516) 918-7283
Abe Teicher
Deloitte Tax LLP, New York
(212) 436-3370
Theresa Hall
Deloitte Tax LLP, New York
(212) 436-3218
Mary Jo Brady
Senior Manager
Deloitte Tax LLP, Jericho
(516) 918-7087


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As used in this document, “Deloitte” means Deloitte Tax LLP, a subsidiary of Deloitte LLP. Please see for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.

1 Mangano v. Silver, 968 N.Y.S.2d 147 (Jun. 26, 2013), appeal dismissed, 22 N.Y.3d 892 (Oct. 10, 2013), appeal dismissed, 2014 N.Y. LEXIS
48, 2014 NY Slip Op 60774 (Jan. 14, 2014).
2 Mangano v. Silver, 968 N.Y.S.2d 147, 150-151 (Jun. 26, 2013).
3 N.Y. Tax Law Article 23, § 801. The MCTD consists of New York City and Nassau, Suffolk, Westchester, Rockland, Dutchess, Orange and
Putnam Counties. See N.Y. Tax Law Article 23, § 800.
4 Mangano v. Silver, 968 N.Y.S.2d 147, 150-151 (Jun. 26, 2013).
5 See,

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