After winning a month-long delay on a “congestion surcharge,” the taxi industry lost its legal battle with the city and state. A judge in late-January lifted the restraining order, allowing the state to begin collecting $2.50 for every cab ride that goes below 96th Street in Manhattan February 2. Passengers in High-VolumeFor-Hire Services (HVFHS) – previously referred to as ride-hail or Transportation Network Company (TNC) vehicles – have also begun adding $2.75 to their fares. Passengers hiring “shared rides,” where riders agree to share their trip with at least one other rider, now pay a surcharge of 75 cents.

Gov. Andrew Cuomo is calling the fees the first step in a larger congestion-pricing plan that he is pushing in Albany, as a critical solution to funding the Metropolitan Transportation Authority.

Taxi interests, supported by some transportation experts, had sued in December to block the new law mandating the fees, which were set to go into effect Jan. 1. Their argument was that the fee unfairly singled out taxis and would doom the industry, which was already staggering from competition with HVFHSs. Their lawyers also argued that HVFHSvehicles, not taxis, were responsible for the congestion that the fees were meant to address, and that the NYC Taxi and Limousine Commission (TLC) had never adopted rules that would have laid out how the fees were to be collected.

The state and the city responded that they were within their rights to impose the tax, which would be dedicated to financing the subway system and collect upwards of $300 million a year.

 

Congestion surcharge

The Tax Law imposes a surcharge that is added to the charge for transportation that both begins and ends in New York State, and that begins in, ends in, or passes through Manhattan, south of and excluding 96th Street (an area known as the congestion zone).

The surcharge began being collected on Saturday, February 2, 2019, and applies to transportation in vehicles that carry people for-hire, including taxis, “green cabs,” black cars, livery vehicles, HVFHS vehicles, shared ride or “pool” vehicles (www.tax.ny.gov/pdf/memos/cs/m18-1cs.pdf) and limousines (a limousine is described as any vehicle with a seating capacity of up to 14 persons, excluding the driver, and any vehicle with a seating capacity of between 15 and 20 persons, excluding the driver, that has only two axles and four tires).

The surcharge DOES NOT apply to the following:

  • Transportation provided in connection with funerals
  • Buses (any motor vehicle with a seating capacity of at least 15 persons, excluding the driver, that does not otherwise qualify as a limousine)
  • Transportation provided by, or pursuant to a contract with, school districts
  • Transportation administered by or on behalf of the Metropolitan Transportation Authority
  • Ambulances or ambulettes

 

Liability for the surcharge

Generally, the person or entity that dispatches a vehicle to a customer is responsible for the payment of the surcharge. This includes businesses and individuals that receive transportation requests directly from customers (as opposed to bases or third-party applications) and use their own vehicles to provide such transportation. This also includes HVFHS companies, as defined in Vehicle and Traffic Law Article 44B. However, for rides provided by medallion taxicabs, the owner of the medallion that is affixed to the taxicab is responsible for the payment of the surcharge. Likewise, for rides provided by Hail vehicles that originate by street-hail, the base that the Hail vehicle is affiliated with is responsible for the payment of the surcharge.

 

Registration 

Any person or entity who will be responsible for the payment of a surcharge on more than one trip in any calendar month must register with the New York State Tax Department by completing an online application and obtaining a certificate of registration, which will be valid for the specified term on the certificate and is subject to renewal. There is a $1.50 fee to register. There is also a $1.50 fee to renew a certificate of registration. You must have a Business Online Services account to register and pay the fee. Log in (or create) an account at: www.tax.ny.gov/online/bus.htm. Select the “Services” menu in the upper left-hand corner of your Account Summary homepage. Select “Other taxes,” then select “Congestion Surcharge Registration” from the expanded menu. For important payment information, visit: www.tax.ny.gov/pay/all/debit.htm.Any person or entity who is responsible for the payment of the surcharge on no more than one trip in any calendar month is not required to register. Such person or entity, however, must file a return and pay any surcharge that is due when a surcharge liability is incurred. If the information reported on the current registration has changed, you are required to update your information on a calendar quarterly basis. There is no fee to update your registration. The applicable surcharge is required to be passed through to passengers and separately stated on any receipt provided.

 

Filing returns and paying the surcharge

Persons liable for the surcharge must use the Tax Department’s Congestion Surcharge Web File application to file monthly returns and pay the surcharge due. They must file returns and pay the surcharge due within 20 days after the end of the month for which the return covers. Persons registered for the surcharge must file a return even if they incurred no surcharges during a calendar month. In addition to any other applicable penalties and interest, any person that fails to pay a surcharge in a timely manner will be subject to a penalty of 200% of the amount due.

You must have a Business Online Services to file returns and pay the surcharge by logging in to your account at: www.tax.ny.gov/online/bus.htm. Select the “Services” menu in the upper left-hand corner of your Account Summary homepage. Select “Other taxes,” then select “Congestion Surcharge Web File from” the expanded menu.

 

Recordkeeping

Persons or entities liable for the surcharge must keep records that are sufficient to determine whether the surcharge was properly applied and must electronically transmit those records to the Tax Department upon request. This includes, but is not limited to, the following for all transportation that is subject to the surcharge:

  • Records of the location, date and time where each trip begins and ends, and the route taken.
  • A record of the date, time and geographic location where the FHV used for a trip enters and/or leaves the congestion zone, if applicable.
  • Records that identify pool trips, and the location, date and time where each individual or group that separately requests transportation enters and exits the vehicle.
  • Records of the vehicle used for the trip, including any number assigned to the vehicle by a regulatory agency or, if none exists, the vehicle’s license plate number and jurisdiction.
  • Records of all amounts charged and collected for the trip, including fare, taxes and surcharges (including the congestion surcharge).
  • True and complete copies of any records that must be kept as required by any applicable regulatory department or agency.

 

You must keep all records for a minimum of three years after filing a return to which those records relate, or from the date such return was due, whichever is later. In the absence of a filed return, the maintenance of records from earlier periods is required. Compliance may be achieved by using a system or equipment that is required to be used in FHVs by a regulatory agency, so long as such system or equipment is capable of collecting, storing and electronically transmitting all required records and information.

Sign up for email updates at: www.tax.ny.gov/help/subscribe.htm.

Sources: Crain’s New York Business, New York State Department of Taxation and Finance

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