---
title: "Open compliance question — NYC Commercial Rent Tax"
sidebarTitle: "NYC Commercial Rent Tax"
description: "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."
icon: "landmark"
---

> **For AI agents:** the complete documentation index is at [llms.txt](/llms.txt). Append `.md` to any page URL for its markdown version.

<Warning>
  **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.
</Warning>

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.

<Info>
  **Source:** `Rackson Exec Summary.docx` section 8.
</Info>

## 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

<Warning>
  **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.
</Warning>

Once received, the analysis is mechanical:

<Steps>
  <Step title="Map each NYC location against the boundary">
    Determine which locations sit in Manhattan south of the center line of 96th Street.
  </Step>
  <Step title="Compare annual gross rent to the threshold">
    Identify which of those locations pay $250,000 or more in annual gross rent.
  </Step>
  <Step title="Test each in-scope location against the exemptions">
    In particular the Small Business Tax Credit, given the entity-level income test.
  </Step>
  <Step title="Determine filing obligations and periods">
    For any location with liability, establish whether quarterly returns are also required and which periods are already past due.
  </Step>
</Steps>

## Action

Follow up with **Rackson (Mike / Caitlin)** for the NYC store address and lease rent list. This is tracked on [Open items and risks](/internal/customers/rackson/open-items).

<Note>
  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.
</Note>

## Related

- [Open items and risks](/internal/customers/rackson/open-items)
- [Entities and systems](/internal/customers/rackson/entities-and-systems) — the RCY store footprint
- [RRS taxes and royalties workpapers](/internal/customers/rackson/workpapers/rrs-taxes-and-royalties) — sales tax and Ohio CAT, the other multi-state tax obligations on this engagement