Law360 is providing free access to its coronavirus coverage to make sure all members of the legal community have accurate information in this time of uncertainty and change. Use the form below to sign up for any of our weekly newsletters. Signing up for any of our section newsletters will opt you in to the weekly Coronavirus briefing.
Sign up for our Corporate newsletter
You must correct or enter the following before you can sign up:
Thank You!
Law360 (July 28, 2020, 8:04 PM EDT ) New York City's commercial rent tax would be temporarily suspended for some Manhattan businesses during the pandemic state of emergency under a bill introduced in the City Council on Tuesday.
Council member Keith Powers, a Democrat, introduced legislation that would suspend the commercial rent tax on businesses with a base rent of less than $1 million for the period beginning June 1. The period would end the day before the tax quarter following the end of the state or city's state of emergency, whichever is later.
Currently, Manhattan businesses south of 96th Street that pay $500,000 or more in rent are required to pay the city's 3.9% commercial rent tax, but the bill would suspend the tax for almost 5,500 businesses, Powers said in a statement Tuesday. The mayor and the City Council have the authority to waive the commercial rent tax without prior approval from Albany, while a sales and use tax holiday would require Albany's approval.
"Right now, New York City is experiencing a state of emergency, and our response to help businesses recover must be commensurate," Powers said. "Relieving payment of the commercial rent tax at this time is a tangible benefit for businesses."
Council member Margaret S. Chin, a Democrat and a co-sponsor of the bill, said in a statement that the novel coronavirus pandemic's effect on small businesses south of 96th street requires a reevaluation of the tax.
"While we appreciate the city's efforts to roll out small-business grants and outdoor dining, these are only the first steps," Chin said. "A temporary repeal of the CRT during this public health emergency will provide relief to even more struggling brick-and-mortars in the red."
The bill is also supported by Manhattan Borough President Gale A. Brewer, the NYC Hospitality Alliance and the Manhattan Chamber of Commerce. Powers' bill comes after he, the hospitality alliance and the chamber released a report Tuesday in response to the economic impact felt by small businesses from COVID-19, the respiratory disease caused by the virus. The report points to Powers' legislation as a means to temporarily suspend the tax and provide relief for smaller and medium-size businesses.
"Businesses in Manhattan are suffering from the 'double whammy' of closed office buildings and reduced tourism, which means there is very little foot traffic to shop in their stores," Jessica Walker, president of the Manhattan Chamber of Commerce, said in a statement.
She added that temporarily suspending the tax could help keep businesses afloat until the pandemic is over.
The report and Powers' bill come after the Partnership for New York City, a group of nearly 300 chief executives from the city's top companies, asked political leaders in seven Northeastern states to consider cutting tax subsidies, ending regional tax competition and eliminating commercial rent taxes on small and medium-size businesses
This isn't the first attempt by the council to temporarily waive or defer the commercial rent tax since the city shut down in March because of the pandemic. Council Speaker Corey Johnson called for immediately deferring the city's commercial rent tax through March, and New York City Comptroller Scott Stringer proposed waiving commercial rent tax payments for two months for ground-floor retail.
Mayor Bill de Blasio's office, Johnson and Gov. Andrew Cuomo didn't immediately respond to requests for comments Tuesday.
--Additional reporting by James Nani. Editing by Joyce Laskowski.
For a reprint of this article, please contact reprints@law360.com.
