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Multistate Tax Alert: New York State Court Declares MTA Payroll Tax Unconstitutional


A judge of the Supreme Court – State of New York recently issued his decision in Mangano v. Silver, holding that the Metropolitan Commuter Transportation Mobility Tax (“MTA payroll tax”) was unconstitutional.  

Under Article IX, Section 2(b)(2) of the New York State Constitution (the “Home Rule Clause”), the State Legislature has the power to enact laws affecting “the property, affairs or government” of local governments only by general law or by special law requested by a super-majority vote of the local legislature (referred to as a “home rule message”). Other than with respect to laws affecting New York City, an exception exists for laws enacted pursuant to a “Message of Necessity” from the Governor if those laws are passed with a two-thirds vote of each House of the Legislature. Court decisions have narrowed the Home Rule Clause so that it does not apply when the legislation in question involves a matter of state concern. In Mangano v. Silver, the Judge ruled that the MTA payroll tax violated the Home Rule Clause and was unconstitutional; however, he did not enjoin the Department from continuing to administer the tax. Governor Andrew Cuomo has indicated that the State will appeal the decision.

This Tax Alert summarizes this decision and its potential ramifications.

The New York State Department of Taxation and Finance has since published on its website the following information that discusses legal proceedings and protective claims for refund regarding the Metropolitan Commuter Transportation Mobility Tax:

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