Section 769(l) of the New York Tax Law authorizes the Commissioner of Taxation and Finance to impose a penalty of up to $1,000 for each failure to provide requested information or documentation in connection with the Metropolitan Commuter Transportation Mobility Tax (MCTMT). It sits inside Article 23, the article that governs the MCTMT, and it targets a specific kind of noncompliance: ignoring a formal request from the Department, not filing or paying late.1New York State Senate. New York Code TAX – Article 23 Metropolitan Commuter Transportation Mobility Tax
What Triggers the 769(l) Penalty
The penalty applies when the Department asks you for something and you don’t respond. That “something” is typically an audit request, a records request, or any other formal demand for information tied to your MCTMT liability. Each separate failure can carry its own penalty of up to $1,000, so a single ignored notice covering multiple items can compound quickly.
The fastest way to trigger it is to set aside a Department notice and forget about it. Section 769(l) is not about the return itself. It is about the paper trail behind the return: payroll records, zone allocation calculations, wage documentation, and anything else the Department needs to verify what you reported.
The Tax Section 769(l) Enforces
The MCTMT is a payroll-based tax that funds the Metropolitan Transportation Authority’s bus, subway, and commuter rail systems. It applies to employers and self-employed individuals doing business within the twelve-county Metropolitan Commuter Transportation District, which covers New York City and seven surrounding counties.1New York State Senate. New York Code TAX – Article 23 Metropolitan Commuter Transportation Mobility Tax
An employer owes the tax if it must withhold New York State income tax from wages and has more than $312,500 in quarterly payroll expense within the district. Self-employed individuals owe it if their net earnings from self-employment within the district exceed $150,000 for the tax year (a threshold that jumped from $50,000 for tax years beginning in 2026).2New York State Senate. New York Code TAX 801 – Imposition of Tax and Rate If you fall outside those thresholds, you don’t owe the MCTMT, and a 769(l) request in this context shouldn’t apply to you.
How 769(l) Fits With Other Section 769 Penalties
Section 769 is the enforcement provision for the MCTMT, and its penalties stack. The information-failure penalty under 769(l) can run alongside separate penalties for filing late and paying late on the same return.
Late Filing
Late filing carries a penalty of 5% of the tax due for each month (or partial month) the return is overdue, up to a maximum of 25%. If the return is more than 60 days late, the minimum penalty is $100 or the total amount due, whichever is less.3New York State Department of Taxation and Finance. Interest and Penalties
Late Payment and Interest
Late payment adds a separate 0.5% penalty per month on the unpaid balance, also capped at 25%. Interest accrues on top of both penalties, compounded daily at a rate the Department adjusts quarterly.3New York State Department of Taxation and Finance. Interest and Penalties
There are no filing extensions for employer MCTMT returns, so missing the quarterly deadline automatically triggers the filing and payment penalties.4New York State Department of Taxation and Finance. Instructions for Form MTA-305 A 769(l) letter often follows a return the Department wants to look at more closely, meaning the same taxpayer can be looking at filing penalties, payment penalties, interest, and per-failure information penalties on one matter.
How to Avoid Triggering It
Two habits keep 769(l) exposure low: respond to every Department notice on time, and keep the underlying records so you can respond.
For federal employment tax purposes, the IRS requires payroll records to be kept for at least four years after filing the fourth-quarter return for the year, which covers most audit exposure. Useful records go beyond pay stubs. Keep your employer identification number documentation, wage payment dates and amounts, employee names and Social Security numbers, copies of W-2s (including any returned as undeliverable), W-4 withholding certificates, tax deposit amounts with EFTPS acknowledgment numbers, and copies of filed returns with confirmation numbers.5Internal Revenue Service. Employment Tax Recordkeeping
For MCTMT specifically, also retain your zone allocation calculations. Since July 1, 2025, the district has been split into Zone 1 (the five New York City boroughs) and Zone 2 (Nassau, Suffolk, Westchester, Rockland, Orange, Putnam, and Dutchess), with different rates in each.6New York State Department of Taxation and Finance. Metropolitan Commuter Transportation Mobility Tax (MCTMT) – Employers If your payroll spans both zones, the supporting math is exactly the kind of documentation a Department request will ask you to produce.
Getting a 769(l) Penalty Waived
New York follows a reasonable-cause standard similar to the IRS approach. If you can show you exercised ordinary care and prudence but were still unable to comply, the Department may waive the penalty. Circumstances that generally qualify include natural disasters, serious illness or death of the taxpayer or an immediate family member, and system failures that prevented timely electronic response.7Internal Revenue Service. Penalty Relief for Reasonable Cause
Not knowing about the request, or relying on a tax professional who let it slip, typically won’t get penalties waived. Interest, in most cases, cannot be waived regardless of the circumstances.
If You’ve Received a Notice
Read what it asks for and note the response deadline. Gather the specific records the Department has identified. If you need more time, ask the Department in writing before the deadline rather than after. Silence is the one response Section 769(l) is written to punish, and each item you fail to produce can be counted as a separate failure carrying its own penalty of up to $1,000.