Many employees at New York City hedge funds and other investment firms are now scattered around the region, working from home. Some view that as an opportunity to avoid a New York City tax, the Wall Street Journal reported. The city’s 4% unincorporated business tax raises about $2 billion a year for the city by taxing investment-fund managers, law firms, and other individually owned businesses, based on the portion of sales or services performed within the city.
- Dig Deeper: As employees are sheltered at homes in the Hamptons or in the suburbs, a group of hedge funds and other investment-management firms have begun using apps to track where their New York-based employees are working day to day. Their goal is to show that a large portion of the fees paid to investment managers were for services performed outside the city and therefore not subject to the city tax.
- Why it matters; Driving the push is the expectation by the firms that many employees will continue to work from home even after offices are allowed to reopen in the next few weeks: “We believe that in the new world people will be comfortable working from home… Even if that is only one to two days a week, that is going to make the tax savings worthwhile from an asset manager perspective. [WSJ]