Relates to the effectiveness of provisions regarding special taxes and supplemental taxes on passenger car rentals

3 Co-sponsors

• Eric Adams
• Ruben Diaz
• Antoine M. Thompson

Title of bill

An act to amend part R-1 of chapter 57 of the laws of 2009 amending the tax law relating to a special tax on passenger car rentals, in relation to the effectiveness thereof; and to amend part F of chapter 25 of the laws of 2009 amending the tax law relating to a supplemental tax on passenger car rentals, in relation to the effectiveness thereof

Purpose or general idea of the bill

To provide that the rental car tax increases set forth in the FY 2009-2010 budget and the MTA funding law apply to all rental agreements entered into on or after June 1, 2009.

Summary of specific provisions

Amends the effective dates for the implementation of the increases in the rental car tax contained in the FY 2009-2010 Education, Labor and Family Assistance budget document (Chapter 57) and the MTA funding bill (Chapter 25) to apply to all rental agreements entered into on or after June 1, 2009.

Justification

The FY 2009-2010 budget amended § 1160 of the Tax Law to increase the vehicle rental tax from 5% to 6%. The MTA funding law (Chapter 25) added a new §1166-a to the Tax Law to increase the statewide vehicle rental tax from 5% to 11% in the 12-county MTA region. In both cases, the increases were to take effect on June 1st and apply to "sales made and uses occurring on and after such date." This implementation provision has placed the rental car industry in a difficult position where, in certain situations, the companies will be expected to pay a tax that they cannot get reimbursed. The national car rental companies simply cannot reprogram their computers to collect the increased tax on these "wrap-around" rentals (i.e., those that commence before June 1st, but extend beyond that date). Yet this is how the Tax Department has interpreted the existing language (see TSB-M-09(1)S).

The implementation language should apply only to those contracts commencing on or after June 1st. If this current implementation date remains unchanged, the car rental industry would be forced to pay the tax on these wrap-around rentals without the possibility to be compensated from the person responsible for payment of the tax. This was an unintended consequence that can easily be remedied by passage of this legislation.

Prior legislative history

New Bill.

Fiscal implications

Negligible impact on tax collections.

Effective date

Immediately.