The NYC Department of Finance has taken the position that rules can be changed after forms and instructions have already been issued, without any notice, all during tax filing season.

The department has recently sent letters to employees required to file Form NYC-1127. In these communications, the city references the STAR credit when it is, in fact, referring to the NYC School tax credit ($62.50 or $125.00) and the rate reduction credit. Despite longstanding practice and existing written guidance, the city is now asserting that these credits are no longer valid reductions to the NYC-1127 liability. Notably, the official instructions currently available still direct filers to claim these credits.

What NYC is Doing

 **Retroactive changes:** The city claims these deductions should not have been allowed since 2016, despite permitting them for years.

 **Rule shifting:** The city is attempting to change the rules after tax returns have already been filed.

Recommended actions:

* Do not ignore any letters. Noncompliance with NYC-1127 filing and payment requirements may result in disciplinary consequences, including possible termination.
* Union members may want to contact their union representatives and request that the union formally address this issue as a significant public policy concern.
* Consider submitting a complaint to the Public Advocate Office at [https://advocate.nyc.gov/](https://go.natptax.com/e3t/Ctc/L2+113/d5rdJh04/VX7Q3n7xfYQmW2SngL_1QL3J2W8_npSB5PxP_qM9V8kW3qgz0W7Y8-PT6lZ3l2W1Rqm-x6rDMYpW1llxph6Wsf6_W6KXT6p326WGXW9cb2d98RnL99W3_-y9y2GMxllW8MqtY81MXvhVW6fN2zX658PxMW6HGxP_6nQ_2XW1NSspQ21ZsmVVx33654mMhgTW2CLm2n412BkdW2Nf8wW2xX1tSN73J1PQZy2spW67TF_D3n0GN-W1MfGh14Z8yNwW13H0ZN81ltyyW4P9-gg1xwPqVW4dlfrP8q4tGvW4DCXKL3z0vl9W8jPdjB3JP7lPW7jXTGL4tJkNfW7RmR1X7tg-MpW5zc3Lm37FQzqW3lpNQ63S3B2YW3pckHZ1sqnqMW2rc46133dQqjf23Q8Pd04).
* Contact the Office of the Speaker of the City Council at [SpeakerMenin@council.nyc.gov](mailto:SpeakerMenin@council.nyc.gov).

Key talking points:

* The Form NYC-1127 instructions and the form itself explicitly direct employees to claim the NYC School tax credit and, where applicable, the NYC rate reduction credit.
* The Department of Finance has historically been difficult to engage with on these matters.
* Under the NYC charter, non-resident employees are assessed a fee equivalent to the income tax paid by NYC residents, which has traditionally included all applicable credits. The NYC-1127 instructions clearly outline how to calculate and report these credits on Schedule B.
* Altering the treatment of NYC-1127 filings after issuing official forms and instructions represents a serious overreach and raises concerns about fairness and consistency. It disproportionately impacts non-resident employees.

[https://www.taxprotalk.com/forums/viewtopic.php?t=36240](https://www.taxprotalk.com/forums/viewtopic.php?t=36240)  


NYC Department of Finance Manufactures a Form NYC-1127 Compliance Concern