Have You Evaluated the New York City Commercial Rent Tax?

The fall is the best time of the year to take a look at your New York City Commercial Rent Tax (CRT) compliance. This often-overlooked tax is unique to New York City. CRT is levied on tenants leasing Manhattan properties south of 96th Street. The tax is levied on “rent” paid to the landlord; however, determining what qualifies as rent can be challenging, resulting in taxpayers both over and underpaying tax. There are also a number of locations in the city that have exemptions from CRT. Why review in the fall? Unless you are under audit, you have 18 months from the date the return is required to be filed (June 20) to request a refund of overpayments. Tenants have until December 20, 2022 to request a refund for the tax year ending May 31, 2021. In addition to exempt areas of the city, a number of COVID-19 issues may have also impacted your tax obligations, including subleases, deferred/abated rent, and property tax rebates.

Because this is such a unique tax, you might also find you have not been complying with the CRT reporting obligation. If that is the case, the city has a voluntary disclosure program you may be able to take advantage of. In either case, Ryan is available as a sounding board on CRT issues. Once we scope your CR-A (annual CRT return), we can provide feedback on exposure and opportunities as well as recommendations to improve compliance efficiency.