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MCTMT: Protective Claim Status
A Q&A on the MCTMT Situation
Q. Is the MCTMT in force?
A: It was overturned by a judge as unconstitutional.
Q: So I don’t have to pay it anymore?
A: Yes, you do. The state is appealing, and meanwhile filing and payment is required.
Q: How long will this appeal take?
A: It could be months before a decision is reached.
Q: Will I be able to get a refund of taxes paid if the MCTMT is ultimately overturned?.
A: Yes. But there is a statute of limitations, after which you can’t get a refund, even if the tax is ultimately overturned. Here’s how it works:
- For employers who were not required to remit the MCMT by PrompTax, the three-year statute of limitations with respect to the MCTMT remitted for “covered employees” will first expire on Nov. 2, 2012.
- For employers who were required to remit the MCTMT using PrompTax, the three-year statute of limitations will first expire three years from the first PrompTax withholding tax payment that was made after Oct. 31, 2009.
- For self-employed individuals (including partners filing group returns), the tolling of the three-year statute of limitations is less imminent because the first MCTMT return for 2009 was due on April 30, 2010.
Q: November 2--that’s very close! How can I make sure I get my refund if there’s no court decision by then?
A: The department has released information on how to file a protective claim. As explained on the site, this “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.” By filling out the form, you essentially stop the clock on the statute of limitations so your refund rights are protected.
Full instructions for filing online are provided on the site. There is no paper option.
Q: Can a CPA file on behalf of a client?
A. Yes, with the client's permission.
Q: Do I need to prepare a revised MTA-305?
A: No. The department is asking taxpayers not to file amended returns. These will not serve as a protective claim. Only the online form does that.
Q: What are the deadlines for filing for a protective claim?
A: For employers: November 2, 2012; for self-employed individuals: April 30, 2013.
Q: What if I miss the deadline?
A: The protective claim will only apply for the filing periods that are still within the statute of limitations, says the site. 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. So even if you miss on the earliest dates, you can still file a claim to cover later payments.
Q: What if a mistake is made, such as filing two claims, or filing a claim when no MCTMT return was ever filed?
A: The NYSDTF isn't encouraging duplicate or irrelevant claims, but it can handle them if these inadvertent errors do occur.
Q: Is that all the info?
A: No. The site provides more details.
Q: What if a higher court ultimately upholds the tax?
A: Then nothing is changed and the protective claims become meaningless. Of course, if the tax is struck down by a higher court, the protective claims could save you a considerable amount of money. Right now, however, the state is feeling optimistic: “We're confident that the MCTMT is constitutional and the decision will be overturned,” the site says.
Q: Any other resources for more information?
A: NYSSCPA members can call the NYSSCPA technical hotline at 212-719-8309 or 212-719-8378, or e-mail their inquiries to email@example.com. You will need your NYSSCPA member ID number.