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Feb 24, 2017

New Filings in New York State and New York City for the Mandatory First Installment (MFI)

Featuring John Genz, Erick Torres

As part of the Federal Surface Transportation and Veterans Health Care Improvement Act of 2015, due dates for certain income tax returns were modified. For calendar year C corporations, and most fiscal year filers, the original due date for the 2016 tax filing was moved from the 15th of the third month, to the 15th of the fourth month, following the close of the corporation’s tax year. For June 30th fiscal year-end C corporations, the new due date will not apply until tax years beginning after December 31st 2025. In light of this change, most state and local jurisdictions that previously used the March 15th, or 2.5 months after the close of the tax year rule, (except for, as of the date of this article, Massachusetts and Wisconsin) have moved their due date to mirror the new federal due date.
Although New York State (NYS) - including the MTA* – and New York City (NYC) moved to the new due date for their income tax return filings. They did not move the due date of the mandatory first installment “MFI” of estimated tax. C corporations whose tax for the second proceeding year exceeded $1,000 must calculate an MFI. Historically, as part of their filings, NYS, MTA, and NYC included a 25% (40% for NY & MTA. if the second preceding year’s tax exceeded $100,000) MFI of estimated tax with the current year filing.
Due to the decoupling of due dates between the income tax filing and the MFI, Forms CT-300 (NYS & MTA), and NYC-300 (NYC) were created. Both forms base the MFI on the second preceding tax year, and allow a credit for the overpayment from prior years. Although the due date of the income tax returns for New York, MTA, and New York City is now April 15th, the MFI is still due March 15th (or 15th day of the fourth month, and third month, respectively, for all fiscal year filers- except June 30 fiscal year filers), and should be accounted for accordingly to avoid an underpayment of estimated tax.

*MTA taxes are a tool for financing a Metropolitan Transit Authority, a regional authority in charge of a train network. If you own or operate a business within an MTA district, you may have to collect taxes on the authority's behalf. The exact form of the MTA tax varies from state to state, and could be a sales tax, a payroll tax or some other type.