NYC corporate tax delay caused by paperwork snafu

A paperwork snafu is causing New York City to urge all companies to request tax filing extensions.

The city’s Department of Finance recently sent out notices strongly suggesting companies delay filing their tax returns. The notices blame Albany for not getting necessary forms and instructions ready in time.

The problem occurred because of tax law changes that were made in 2015. The changes were meant to benefit some 45,000 small businesses in the state. But the city is suggesting that all companies — not just the 45,000 — file for an extension.

A spokeswoman for Finance said that since the law’s enactment, “We have been working with the state to finalize rules and new forms and instructions. The city’s forms must align with — and therefore follow — the state’s.”

The spokeswoman emphasized that the city and state are working harmoniously toward a solution and that the city expected forms to be available for e-filing in March.

“But we don’t want to ask businesses to wait until the last minute, so we are encouraging all corporate tax filers to file for extensions,” she said.

The city claims this move won’t slow tax revenues. But a source of mine, knowledgeable about these things, says that is exactly what will happen.

How badly the city’s cash flow — as the incoming revenue is called — will be hurt would seem to depend on how many giant corporations that aren’t affected by the tax law change decide to delay filing.