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Hedge funds avoid NYC tax

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]

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