Payroll Support

Payroll Update #20920, scheduled to be released September 17, 2009, includes the implementation of the New York Metropolitan Commuter Transportation Mobility Tax, effective March 1, 2009.

As of March 1, 2009 the New York Metropolitan Commuter Transportation Mobility Tax (MCTMT) retroactively applies to certain employers that have payroll expense within the Metropolitan Commuter Transportation District (MCTD). The MCTMT rate is 0.34% (.0034) of payroll expenses for covered employees.

Frequently Asked Questions
What Steps Should I Take
Reports
Payroll Liability Balance Adjustments

Frequently asked questions

Who is affected?
You may be affected if you currently

1. withhold New York income taxes from employees and make withholding tax payments in the State of New York, or
2. have a valid New York State Department of Taxation and Finance Withholding Identification Number, and 
3. engage in business within the Metropolitan Commuter Transportation District (MCTD).

When will the new tax be available in QuickBooks?
Payroll Update #20920, scheduled to be released September 17, 2009, includes the implementation of the MCTMT. Check the Payroll News Web site for the latest information about payroll updates including Payroll Alerts, which provides any steps that may be required of you to implement a given change.

What steps should I take?

Step 1:  Download and install Payroll Update 20920 as soon as it is released

If you have Automatic Updates turned on and have selected all updates to download automatically, your QuickBooks software will download and install the update for you.  If you do not have Automatic Updates turned on, you can download this payroll update manually.

If you subscribe to the Disk Delivery service, the next Disk Delivery is scheduled for late September 2009. If you have internet access, you may want to download Payroll Update 20920.

Step 2:  Add the NY-MCTMT (Transit Tax) to your company file

QuickBooks 2007 and 2008 (R5 and below) users: 

Select Manage Payroll Items, New Payroll Item, from the Employees drop down menu. 

1. Click on Custom Setup. 
2. On the Payroll item type, select Other Tax, click Next. 
3. Select NY-MCTMT (Transit Tax) as the predefined tax from the selection list. 
4. Verify Tax is paid by the company is selected.  Click Next
5. Click Next twice to get to the Agency for Company-paid Liability screen.
6. In the Enter name of agency to which liability is paid field, enter Commissioner of Taxation and Finance, click Next and select QuickAdd if prompted.
7. In the Enter the number that identifies you to agency field, enter your New York State Department of Taxation and Finance Withholding Identification No. Continue to click Next twice, and click Finish. 

If you have already set up Custom Payroll Items for the NY-MCTMT (Transit Tax), select QuickBooks Help, from the Help menu, click on the Search tab, and enter Merge Payroll Items in the search field.  Follow the instructions provided in QuickBooks Help for merging your Custom Payroll Items with the new taxes supplied with the Payroll Update.
 
Step 3:  Add tax to all covered employees

1. From the Employee Center, double click on an employee subject to the NY-MCTMT (Transit Tax). Click on the Payroll and Compensation Info tab, click on Taxes, and then click on the Other tab.
2. In the Item Name column, select NY-MCTMT (Transit Tax) from the drop down, and click OK twice.
3. Repeat steps 1 and 2 for all covered employees

QuickBooks 2008 (R6 and above), QuickBooks 2009, and QuickBooks 2010 users:

Select Pay Employees or Payroll Setup to trigger the Add New Tax Wizard. The Wizard will guide you through the setup process.  (The Wizard is triggered by employees being subject to NY-Unemployment Company.  If the Wizard is not triggered; i.e. employees are only subject to NY-Withholding, please go to Step 2 (under "QuickBooks 2007 and 2008 (R5 and below) users:") to add the tax to your company file and complete Step 3 to add the tax to all covered employees.)
 
Note:  Since the tax is effective March 1, 2009 and the threshold of $2,500 needs to be determined, the Add New Tax Wizard will not perform any liability adjustments for the periods prior adding the tax for covered employees. 

Verify that each covered employee has the NY-MCTMT tax set up (or removed if not applicable to this tax).

Note:  The taxes will be calculated and withheld on the first paycheck dated after the NY-MCTMT (Transit Tax) is setup for the covered employees.  The tax rates are programmed in the tax table within QuickBooks.  Since the applicability of the NY-MCTMT (Transit Tax) is determined when the threshold of $2,500 in payroll expenses is exceeded in a calendar quarter, you may select a rate of 0% from the Company Tax Rates for 2009 drop down selection if the tax is not applicable in a particular calendar quarter.  More information on this tax can be found on the agency website at the following links:

• MCTMT information
• TSB-M-09(1)MCTMT, Metropolitan Commuter Transportation Mobility Tax

Step 4:  Generate a Payroll Detail Review report to identify the employees and amount of payroll expense subject to the tax

1. Click on the Reports menu, highlight Employees and Payroll and click Payroll Detail Review.
2. Click the Display tab.
• In the Report Date Range section we will select the dates later; see Step 5 below.
• In the Columns section
• Select (left margin), Entered/Last Modified, Date, Name (manually select), Payroll Item (manually select), Income Subject to Tax
• De-select Wage Base, Wage Base Tips, Payroll Tax Rate, Amount, Tax Table Version, and User Edit? Calculated Amount, Amount Difference.
3. Click the Filters tab.
• In the Current Filter Choices section, highlight Payroll Item on the Filter drop-down list, select Social Security Company on the Payroll Item drop-down list.  
• You can also select individual employees to be displayed on the report by selecting Name in the Choose Filter section, click Multiple names in the drop down, and select the applicable employees from the list.

Step 5:  Customize report dates and print or export.  (This is to identify which quarters are subject to NY-MCTMT)

NOTE:  If you know your payroll expense exceeds $2500 for each Quarter, proceed to step 5.2

1. Quarter 1, 2009
• In the Report Date Range section, change the period covered by selecting Custom in the Dates drop-down and entering 01/01/2009 to 03/31/2009 for first quarter 2009
• Determine if the amount of payroll expense (wages subject to social security tax, excluding wage base limit; see column Income Subject to Tax) exceed the $2,500 threshold for each calendar quarter.
• If greater than $2500, process a second report to identify the payroll expense subject to the tax from 03/01/2009 to 03/31/2009 by selecting Custom on the Dates drop-down and entering 03/01/2009 to 03/31/2009.
• Print or Export report.
• Repeat for 04/01/2009 through 06/30/2009 and 07/01/2009 through 09/30/2009 or to the last paycheck date prior to adding the NY-MCTMT (Transit Tax).
• Print or Export report.
2. All Quarters (If you know your payroll expenses for each quarter in 2009 have exceeded $2500)
• In the Report Date Range section, change the period covered by selecting Custom in the Dates drop-down and entering 03/01/2009 to the last paycheck date prior to adding the NY-MCTMT (Transit Tax)
• Print or Export report.
3. Using the reports you have created, calculate the tax due at .34% per covered employee's Income Subject to tax for each employee.  The Income Subject to Tax should be all Social Security taxable wages (excluding the Social Security wage base limit) from 03/01/09 to current.  (The $2500 threshhold is to determine if the company is taxable to NY-MCTMT for that quarter.)

Make a Backup

Payroll Liability Adjustments are needed to correct the payroll expense/wages and tax amount for the periods prior to adding the NY-MCTMT (Transit Tax) to the applicable employees and processing paychecks.  Adjustments will be for 03/01/2009 through 09/30/2009 rather than by quarter.

1. Click the Employees menu, highlight Payroll Taxes and Liabilities and click on Adjust Payroll Liabilities.
2. In the Date field, enter the date as 09/30/2009 for making the necessary initial adjustments.
3. In the Effective Date field, enter the date as 09/30/2009.
4. Click Employee and choose the employee's name from the drop-down list (refer to error report). 
5. In the Item Name field, choose NY-MCTMT (Transit Tax). 
6. In the Amount field, enter the amount of the tax adjustment as a positive number:  NY-MCTMT (Transit Tax) calculated on the payroll expense (wages subject to social security tax) amount for the period of 03/01/2009 up to the last paycheck date prior to adding the tax to employees and processing paychecks as applicable. 
7. In the Wage Base field, enter the Wage Base (Payroll expense (wages subject to social security tax) applicable to the tax for the period of 03/01/2009 up to the last paycheck date prior to adding the tax to employees and processing paychecks as applicable.) as a positive number.
8. In the Memo field, enter a note to yourself about the adjustment, i.e. new tax implemented by state
9. Click Next Adjustment if additional adjustments are needed. 
10. When you have finished adjusting the tax liability for each affected employee, click OK.

Step 6:  (Non-mandated PrompTax Filers) Prepare your initial tax return filing (MTA-305, Employer?s Quarterly Metropolitan Commuter Transportation Mobility Tax Return)

Note:  New York State Department of Taxation and Finance is communicating that the initial return will cover the period from March 1, 2009 through September 30, 2009.

Generate and print a Payroll Item Detail report to assist in preparing the initial return filing.

1. Click on the Reports menu, highlight Employees and Payroll and then click on Payroll Item Detail.
2. Click the Modify report button and select the Display tab. In the Report Date Range section, change the period covered by selecting Custom in the Dates drop-down and entering 03/01/2009 to 09/30/2009.
3. In the Columns section, select (left margin), Entered/Last Modified, Date, Name, Payroll Item, Income Subject to Tax, Wage Base, Payroll Tax Rate, Sales Price, Amount, and Tax Table Version.
4. Click the Filters tab. In the Choose Filter section, highlight Payroll Item on the Filter drop-down list.
5. Select NY-MCTMT (Transit Tax) in the Payroll Item drop-down list.  Print a copy of the report.
6. Use this report to complete Form MTA-305, and submit with respective payment.

For information regarding the filing and payment requirements for employers participating in the PrompTax program, please visit the New York State Department of Taxation and Finance website.