February 8, 2017
Advantage Title: Industry Bulletin 2017-01
Update: Elimination of Industrial Development Agency Exemption from Payment of the Additional Mortgage Tax
As previously detailed in Advantage Title Industry Bulletin 2016-06 (“Bulletin 2016-06”), a copy of which can be found here, as of September 30, 2016, Chapter 394 of the Laws of 2016 eliminated the exemption from the additional tax (“AT”) component of the mortgage recording tax (“MRT”) of $0.25 per $100.00 of mortgage debt (or $0.30 per $100.00, for those counties within the Metropolitan Commuter Transportation District) applied in mortgage transactions involving an Industrial Development Agency (“IDA”) and other agencies or organizations created under the General Municipal Law or Public Authorities Law. As enumerated in Bulletin 2016-06, Governor Cuomo noted in his Approval Memorandum that the legislature had agreed to extend the effective date of the Legislation to July 1, 2017; but, such change would need to be approved by a chapter amendment to the Legislation.
Chapter 3 of the Laws of 2017 (“Revised Law”) changed the effective date of Chapter 394 from September 30, 2016, to July 1, 2017. A copy of the bill (A374/S979) signed into law by the Governor on February 1, 2017 can be found here.
Capitalized terms not specifically defined in this Bulletin shall have the same meaning given them in Bulletin 2016-06.
IMPACT OF REVISED LAW ON PREVIOUSLY CLOSED AND FUTURE IDA TRANSACTIONS
Mortgages executed, made, transferred, or assigned by or to the IDA, an agent of an IDA, or an entity receiving financial assistance from an IDA (collectively, “IDA Mortgages”), and recorded on or after July 1, 2017, will no longer be exempt from the imposition of the AT. As a result, IDA Mortgages will be fully exempt from MRT as long the mortgage is recorded prior to July 1, 2017.
As to recoupment of AT paid on IDA Mortgages recorded on or after September 30, 2016 but prior to July 1, 2017, an application for refund of the payment of the AT can be made to the New York State Department of Taxation and Finance (“Department”) by filing Form MT-15.1 with the Department within two years of the date of receipt of payment of the AT by the recording officer. A link to Form MT-15.1 can be found in Technical Memorandum TSB-M-17(1)R (the “Memo”), issued by the Department on February 2, 2017. Please note, the last sentence of the Memo states the following: “No exemption or refund is allowed for any mortgage recording taxes where the IDA authorized such exemption after the mortgage has been recorded.” Based on informal feedback from the Department, the phrase “…where the IDA authorized such exemption…” means those instances where the IDA transaction documents explicitly provide that the AT would be paid by an entity receiving financial assistance from an IDA or those instances where the IDA transaction documents explicitly provide that the entity receiving financial assistance from an IDA would not be entitled to an exemption from the AT.
Please contact Drew Steigler, Chief Underwriting Counsel, at
631.424.6100 or firstname.lastname@example.org
with any questions concerning this Bulletin.
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