You have to remit the city taxes to the tax authority you collected from your customers and included in the amount reported on your form 1099-K.
On your tax return, you'll report the gross amount as income and the city taxes to remitted as expenses.
Enter the taxes under Taxes and licenses, on Schedule C if you are self-employed, on form 1065 if you file as a LLC or partnership, or form 1120S if you ile as an S-corp.