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BLOG / 08.05.26 /Kenneth R. Jacobs

Pied-á-Terre Tax: Co-op Update

On Monday, August 3, 2026, we asked managing agents or Co-op Boards to contact us if they had received separate notices from the City regarding PAT Tax that might be owed by shareholders in their buildings. It appears that some managing agents have received such notices on behalf of the cooperative corporations whom they serve. The notices to the Co-ops include a schedule of shareholders who might be liable to pay the tax. A sample notice is available HERE.

We do not know why some agents received notices while others didn’t.  Thus it appears that the notification process remains faulty, especially if the City is relying on the cooperatives to dun individual shareholders.

The Notice includes a schedule purportedly identifying the covered Units, the number of shares, and their filing codes. It also states that either the individual shareholder or the “development owner” (presumably the cooperative corporation) can file an exemption request on behalf of the shareholder. This does not conform to the statute, which places the primary filing responsibility on the tenant-shareholder of the cooperative.

In addition, the Notice  fails to specify the basis for the City’s computations of market value or the resulting tax liability claimed. In order to verify the City’s calculations, shareholders will need to find out the total number of shares issued by their cooperative corporation (including additional shares for hallways, roof rights, etc.) so they can calculate their “share ratio” on which the City’s “imputed Phase One market value” for their unit is based. Again, we do not know what database the City is relying on to ascertain the total issued and authorized shares.

In short, if a Co-op has received a PAT Tax notice from the City, it now has a basis for notifying particular shareholders that they may be subject to the PAT Tax (but not how much) and explaining their individual responsibilities.  We wonder whether the City will inform cooperatives exactly how much they will need to collect in PAT Tax from an individual shareholder after the September 18^th deadline expires but before January. If the Board or management never receives a separate notice,  then the risk remains that neither the Co-op Board nor management will know if any particular shareholder is even potentially liable  until the (presumably)  more detailed tax bill is actually sent by the City in January  demanding collection.  If anyone receives specific guidance from the Department of Finance on this point before January, please let us know.