§ 7-06 Presumptions and Burden of Proof.
RCNY § 7-06
It shall be presumed that all premises are taxable premises and that all rent paid or required to be paid by a tenant is base rent until the contrary is established, and the burden of proving that such presumptive base rent or any portion thereof is not included in the measure of the tax imposed by the law is on the tenant. Where a tenant uses premises both for residential purposes and as taxable premises and the tenant pays an undivided rent for the premises so used, it shall be conclusively presumed against such tenant that the rent ascribable to so much of such premises as is used as taxable premises shall be the amount which such tenant deducts as rent for such premises in determining his federal income tax (as reduced by any disallowance of such deduction which is not being contested) which is fairly attributable to the tax period or tax year. Where a tenant operating a garage or parking lot assigns specific space therein to another person for the parking of a motor vehicle used by the latter in the conduct of a trade, business, profession, vocation or commercial activity, the garage or parking lot operator may be permitted to deduct the amounts received by or due him for such space. To claim such deductions each such garage or parking lot operator is required to take from such other person, in good faith, and at the time the space is assigned, a Certificate of Assigned Space Use in the form of the certificate hereafter set forth. Unless the operator of a garage or parking lot shall have taken a completed certificate as described, and shall have signed the certificate, the presumption of law with respect to taxability shall prevail. Operators are required to retain such certificates and make them available to the Department of Finance on request therefor. Note: This deduction is not permitted where the tenant of the parking space is exempt from tax under 19 RCNY § 7-04(f). CERTIFICATE OF ASSIGNED SPACE USE Date ______________________________ Name of Garage______________________________Operator______________________________Address of Garage______________________________The undersigned hereby certifies that he (it) has been assigned and is using specific space at the above garage or parking lot for a monthly or longer term, for the parking of a motor vehicle used in the conduct of a business or profession, as follows: Assigned Space ________________Vehicle Reg. No. ____________________ Stall or Lane No. The foregoing statements are true:____________________________________________________________Signature of Vehicle Owner Signature of Garage Operator ______________________________ Address _________________ __________________ Type of Business Comm. Rent Reg. No. Note: A vehicle owner engaged in commercial activity and occupying space in a garage is subject to the Commercial Rent or Occupancy Tax Law and is required to file returns and pay the tax imposed by said Law. An organization that the Internal Revenue Service has determined to be exempt from federal income taxation pursuant to subsection (a) of § 501 of the Internal Revenue Code, other than organization described in paragraph (2) or (25) of subsection (c) of such section 501, will be deemed to have rebutted the presumption that premises occupied or used by such organization are taxable premises with respect to that organization, provided the premises are not used substantially in connection with an unrelated trade or business, as described in § 513 of the Internal Revenue Code. Such premises will be presumed not to be taxable premises with respect to that organization and the burden of proving that premises used or occupied by such an organization are taxable premises is on the Commissioner. However, if such premises are used substantially in connection with an unrelated trade or business, the presumption of taxability remains in effect and the burden of proving the premises are not taxable remains on the organization. An organization exempt from federal income taxation under subsection (a) of § 501 of the Internal Revenue Code, other than an organization described in § 501(c)(2) or (25) of the Internal Revenue Code, will be deemed to have rebutted the presumption of taxability of premises used or occupied by such organization notwithstanding that such premises are subleased in whole or in part by such organization, provided that rent received by such organization from such sublease qualifies for exclusion from unrelated business taxable income under subsection (b)(3) of § 512 of the Internal Revenue Code determined without regard to subdivisions (4) and (13) of that subsection. In determining whether premises occupied, used or intended to be occupied or used by a nonprofit organization will be considered to be used substantially in connection with an unrelated trade or business, consideration will be given to all of the facts and circumstances of each case, which may include, but are not limited to, the following factors: the portion of the square footage used in connection with the unrelated trade or business, the portion of gross receipts derived from unrelated business activities at the premises, and the number of personnel at the premises engaged in unrelated business activities. The following examples illustrate the foregoing: Example 1: X Corp. is a nonprofit organization exempt from federal income tax under Internal Revenue Code § 501(c)(4). As part of its nonprofit activities, X Corp. publishes a magazine on topics related to its exempt purpose that carries advertisements of a general nature. The income from selling advertising space in the magazine is subject to tax as income from and unrelated business. Fifty percent (50%) of the staff located at premises rented by X Corp. in New York City are exclusively engaged in selling advertising space in the magazine. On the basis of the facts of this case, the premises will be considered to be used substantially in connection with an unrelated business and X Corp. will not be deemed to have rebutted the presumption that those premises are taxable premises. Example 2: Y Corp. is a nonprofit organization exempt from federal income tax under Internal Revenue Code § 501(c)(4). Y Corp. enters into a lease of office space in New York City. Before the commencement of the lease term, Y Corp. determines that it does not require all of the space it leased and, therefore, Y Corp. immediately subleases 60 percent of the space to another organization exempt from federal income tax under Internal Revenue Code § 501(c)(4). The rent received from the sublease is not subject to federal income tax as income from an unrelated trade or business. Of the remaining 40 percent of the space, Y Corp. uses one half in connection with an unrelated trade or business and one half in connection with its nonprofit activities. Because 80 percent (60 percent plus 1/2 of 40 percent) of the total space leased by Y Corp. is not used in connection with an unrelated trade or business, Y Corp. will be deemed to have rebutted the presumption that the premises are taxable premises. Nothing in this § 7-06 shall be construed to subject to the commercial rent or occupancy tax imposed by Chapter 7 of Title 11 of the Administrative Code persons or organizations exempt from the tax under § 11-704(a)(4) of the Administrative Code. See 19 RCNY § 7-04.
