Overview

All S Corps that are conducting business, employing capital, owning or leasing property, or maintaining an office in New York City (NYC) are subject to NYC’s General Corporation Tax (“GCT”).

How GCT is calculated

The tax is calculated using four different methods, and the highest resulting amount determines the tax owed. 

The four methods are: 

1. 8.85% of net income allocated to NYC;
2. 0.15% of business and investment capital allocated to NYC (not to exceed $1m for tax years 2009 or after);
3. 8.85% of 15% of net income plus the amount of salaries or other compensation paid to any person, including an officer, who owned more than 5% of the S corporation; or
4. A minimum tax based on the S Corporation’s NYC gross receipts which is determined as follows:
   • $100,000 or less = $25 minimum tax
   • More than $100,000 but not more than $250,000 = $75
   • More than $250,000 but not more than $500,000 = $175
   • More than $500,000 but not more than $1,000,000 = $500
   • More than $1,000,000 but not more than $5,000,000 = $1,500
   • More than $5,000,000 but not more than $25,000,000 = $3,500
   • More than $25,000,000 = $5,000

 

GCT exemptions

Some S Corps are exempt from GCT. These include:

• S Corps that did not engage in business activity or own real property in NYC
• S Corps taxed under NYC’s banking corporation tax
• S Corps subject to NYC’s utility tax (excluding vendors of utility services subject to GCT)
• S Corps organized under IRC 501(c)(2) or 501(c)(25) for the purpose of holding property
• Insurance corporations
• Non-stock nonprofit corporations granted an exemption by NYC
• Limited-profit housing and housing development fund companies organized under Articles I and XI of the Private Housing Finance Law

Setting up your NYC GCT account

To comply with New York City General Corporation Tax (GCT) requirements, your S Corp must set up an online account with the NYC Department of Finance.

The setup process differs depending on whether your S Corp has previously filed a GCT return.

Please follow the instructions below based on your situation:

• Setting up an NYC GCT account (S Corp return filed last year) 
• Setting up an NYC GCT account (No previous S Corp return filed yet)  

Setting up an NYC GCT account (S Corp return filed last year) 

If your S Corp filed a New York City General Corporation Tax (GCT) return last year, you'll need to set up an online account to manage and file future returns.

Below are the steps to get your GCT account properly set up:

1. Access the NYC GCT website 

2. Select Pay online

 

3. Select Business & Excise Taxes

 

4. Select “Create One” below the login button to begin creating your account.

5. Answer Yes or No to the qualifying question

• Select Employer ID and the ID Type
• Input your business’s EIN in the following format (99-9999999)
• Click Verify ID.
• Once the ID is verified, you will select Sign Up

6. Enter your business’s legal name and select Next

 

7. Select General Corporation Tax as the Account Type.

• For the verification method, since you have already filed an S Corp return with NYC previously, you will select Line item on one of the last three returns filed and enter in the dollar amount as shown on the most recently filed return on Line 1 (far left line)
  • Please note that if you are trying to make an account with a tax return filed this year, you will need to wait for NYC to process the return on their end before the validation will work.

 

8. Click Next

9. If the information entered is verified by NYC, then you will be able to follow the next steps to create a username and password, as well as entering in the requested information.

10. Once the account is created, you will be able to make a payment by selecting Make or Report a Payment.

• For the Payment Type, if you are paying off a notice, then you will select Bill Payment
• If making an estimated tax payment for the current year, you will select Estimated Payment
• If you are making an extension payment timely (before March 15th), you’ll select Extension Payment
• If you are paying the remaining amount due for your tax return, select Return Payment

11. It will then prompt you to select the year the payment is being applied to:

• If it is for a previous balance, select the tax year in which the balance is from
• If making an estimated tax payment, select the current calendar year

12. Once the payment is made, we will use your uploaded confirmation to categorize this transaction in your books as "State Franchise/Excise Taxes." If you find any issue with the categorization during the year, please ensure your payment confirmation was properly uploaded using the "Upload Documents" feature found under the "Documents" tab and let your Member Relationship Manager know so that they can follow up with your Accounting Team.

GCT Tax is a business tax and therefore, the payments should be made from your business account, not your personal.

Setting up an NYC GCT account (No previous S Corp return filed yet)  

First you'll need to request a Verification Letter ID to start the process:

1. Navigate to the NYC Department of Finance page

2. Scroll down to the Services section and click Letter for Registration

3. Use your S Corp EIN

Screenshots are provided below along with the corresponding steps to guide your selections from the dropdown menus: 

• Employer ID
• FEIN = S Corp EIN # (This is saved in your Collective documents)
• Your Legal Name (Last name, First name)
• General Corporation Tax (be mindful that this automatically populates to The Banking Corporation Tax which is not correct).
  • You must scroll down and select General Corporation Tax from the drop-down list

1. When you receive the letter you'll go back to the website and Create an account

 

2. Enter the S Corp EIN and Legal name

3. Verify using the Letter ID (the letter you requested and received to set this up)

 

4. Select the General Corporation Tax from the drop down menu

5. If you run into any issues creating your account or requesting the Verification Letter, please contact NYC directly by calling 311

If you are calling from outside New York City or using TTY or relay services for the deaf or hard of hearing, call 212-639-9675

Member responsibility

Members must notify Collective if they have moved to, have an employee in, or have otherwise identified that they may need to file a GCT return. Failure to do so will likely result in penalties and interest by the time we are preparing your tax return. 

Annual NYC GCT returns are due by March 15 and filing can be extended by 6 months by filing Form NYC-EXT by the filing deadline. Nonetheless, this is not an extension to pay your GCT; the tax due is due March 15. Failure to pay timely will invalidate your extension and you will be subject to penalties and interest for delayed filing. If you expect to owe more than $1,000 in tax, you must file and pay quarterly estimated tax payments with Form NYC-400 (see page two for estimated payment due dates):

 

 

What Collective will do 

While we cannot provide advice or projections, we will prepare/file NYC GCT tax returns and/or extensions, as well as your S Corporation New York state tax return, using the information you provide to us.

Once GCT is paid, we will use your uploaded confirmation to categorize this transaction in your books as "Business Franchise/Excise Taxes." If you find any issue with the categorization during the year, please ensure your payment confirmation was properly uploaded using the "Upload Documents" feature found under the "Documents" tab and let your Member Relationship Manager know.

 

Disclaimer: The information contained in this document is provided for informational purposes only and should not be construed as legal, financial, or tax advice. It is not intended to be a substitute for obtaining legal, accounting, or other financial advice from an appropriate and/or licensed  adviser, or for the purpose of avoiding U.S. Federal, state or local tax payments and penalties.