Open compliance question — NYC Commercial Rent Tax
An unresolved question on whether NYC Dave's Hot Chicken locations owe New York City Commercial Rent Tax, and what PBI needs from Rackson to resolve it.
This is an open, unresolved compliance question — not a documented position. Nothing on this page should be treated as a conclusion about Rackson's CRT liability. It records what was raised, the rules that apply, and what PBI still needs in order to answer it.
Rackson flagged that some Urban Dave's Hot Chicken locations may owe NYC Commercial Rent Tax (CRT). One location is currently filed under Burger King; previously there were two, one of which has since closed permanently.
Source: Rackson Exec Summary.docx section 8.
How CRT works
| Rule | Detail |
|---|---|
| Who it applies to | Tenants in Manhattan south of the center line of 96th Street paying $250,000+ in annual gross rent, absent an exemption. |
| Rate | 6% of base rent after a 35% reduction — an effective rate of roughly 3.9%. |
| Sliding-scale credit | Available for rents between $250,000 and $300,000. |
| Annual return due | June 20. |
| Quarterly returns | Also required if annual liability is $3,000 or more — due Sep 20, Dec 20, and Mar 20. |
Exemptions
- The World Trade Center area
- The Commercial Revitalization Abatement Zone
- Government and nonprofit tenants
- Small Business Tax Credit — tenants with $5M or less in total income and rent under $500,000/year
What's needed to resolve it
Blocked on the client. PBI needs a list of all NYC store addresses and their annual rent figures from the leases, so each can be mapped against the 96th Street boundary and the rent threshold. This has not yet been provided.
Once received, the analysis is mechanical:
Determine which locations sit in Manhattan south of the center line of 96th Street.
Identify which of those locations pay $250,000 or more in annual gross rent.
In particular the Small Business Tax Credit, given the entity-level income test.
For any location with liability, establish whether quarterly returns are also required and which periods are already past due.
Action
Follow up with Rackson (Mike / Caitlin) for the NYC store address and lease rent list. This is tracked on Open items and risks.
The location is currently filed under Burger King rather than under the Dave's entity, which is itself worth confirming as part of resolving this — the filing entity affects which entity's income is tested for the Small Business Tax Credit.
Related
- Open items and risks
- Entities and systems — the RCY store footprint
- RRS taxes and royalties workpapers — sales tax and Ohio CAT, the other multi-state tax obligations on this engagement