NYC’s Pied-À-Terre Tax Rollout Enters Legal Limbo
There was significant news regarding New York City’s new pied-à-terre tax rollout on Monday. In what has become such a common move, it borders on cliché, the new property tax surcharge (like almost every new or updated tax regime in today’s climate) was challenged in court. In this case, a lawsuit was filed last week by a group of NYC homeowners who feel like the city wrongly flagged their primary residences as subject to the new tax and thus is unfairly requiring them to apply for an exemption.
While that lawsuit advances, a Staten Island judge on Monday granted a temporary restraining order against the new tax rollout, effectively forcing the city to pause its implementation of the pied-à-terre tax. The pause did not last long, though, as later that same day the city filed appeal paperwork which effectively blocks the restraining order until arguments can be heard on August 31st. A spokesperson for the city also confirmed they will continue to roll the surcharge tax out as planned.
It’s important to note that even if the lawsuit is successful, the focus of the lawsuit is on the implementation and administration of the tax – not the validity of the tax itself. The lawsuit’s complaint focuses primarily on:
- The publication of 960,000 properties potentially subject to the new tax
- Letters sent to around 17,000 property owners suspected of owing the new tax
- The city seemingly placing the initial burden of proof on property owners to prove they are not subject to the tax
So What Should You Do?
Continue to prepare to apply for an exemption by the extended September 18th deadline, especially if you have received or do receive any tax notification from the city about your property. The tax itself will remain regardless of the lawsuit. Additionally, the city is continuing to administer the tax process as planned, at least until oral arguments are made on August 31st (with a ruling presumably determined shortly thereafter). In the event the lawsuit is unsuccessful, affected or notified property owners would only have about two weeks left to secure any exemptions from the surcharge. Thus, it’s best to make sure you’re prepared to apply for any applicable exemptions including all required supporting documentation.
WilkinGuttenplan is continuing to monitor all NYC pied-à-terre tax developments and will send out additional updates when further information becomes available.
