(The Center Square) – Many New York City hedge-fund and private-equity partners are reportedly turning to a new app that is helping them bypass a tax assessed on those who work outside of the city.
The app was created by Monaeo, a subsidiary of San Francisco-based Topia Limited that specializes in business traveler tax and payroll management and is a contributing factor in the company’s increase in business.
The nation’s largest city charges a 4 percent "unincorporated business tax" on hedge funds, private-equity firms, law firms, and accounting firms that conduct business outside of city limits.
The COVID-19 pandemic caused many firms to work from their kitchens or living rooms, but many executives remain susceptible to the UBT.
The Wall Street Journal reported that the UBT raises close to $2 billion annually.
Anupam Singhal, co-founder of Monaeo, said the app’s clientele consists of some of the highest earners. Monaeo expects its customers to eventually save more than $15 million on the tax, which, in turn, would spell a 17 percent revenue decline for New York City, CNBC reported.
Singhal said there is a tax residency exodus of sorts, with many executives. One of the places claimed instead of New York City is Florida.
Personal income tax is not covered under the UBT loophole and will be calculated even though telecommuting became the norm since the outbreak first took hold in March. New York’s “convenience of employer” rule allows the city to collect from someone working remotely.