Can a New York taxpayer subtract military active-duty pay and a related state-employer supplement from federal adjusted gross income under Tax Law section 612(c)(8-b)?

Plain-English summary

Todd K. Gorman, a Master Sergeant in the United States Army Reserve, was called to active service in January 2003 pursuant to federal active duty orders issued under Title 10 of the United States Code. He was assigned to Fort Drum in New York and was later temporarily assigned to Fort Dix in New Jersey. Gorman received active service military pay for this duty. He was also a civilian employee of the New York State Police, and the State Police paid him a supplement to his military pay while he was on active duty. He asked the Department whether either the active-duty military pay or the State Police supplement could be subtracted from federal adjusted gross income in computing New York adjusted gross income under Tax Law § 612(c)(8-b).

The Department explained that § 612(c)(8-b) is narrowly drawn: it subtracts compensation for active service performed within New York State, but only for a person who is a member of the "New York state organized militia," a term defined in Military Law § 2(1). That term covers the New York Army National Guard, the New York Air National Guard, the inactive National Guard, the New York Naval Militia, and the New York Guard - state military organizations, not the federal reserve components.

Because Gorman served in the United States Army Reserve, a federal reserve component, rather than in one of the state organized militia units listed in Military Law § 2(1), the Department concluded he was not a member of the New York state organized militia. As a result, his active-duty military pay did not qualify for the § 612(c)(8-b) subtraction. The Department also held that the supplemental pay the New York State Police paid him while he was on active duty likewise failed to qualify, since that subtraction modification is limited to the same category of militia pay and does not extend to a civilian employer's top-up payments.

What this means for you

Reservists and National Guard members

The § 612(c)(8-b) subtraction is not available to every service member called to federal active duty. It applies only if you are a member of the New York state organized militia as defined in Military Law § 2(1) - the New York Army National Guard, Air National Guard, inactive National Guard, Naval Militia, or New York Guard. If you serve in a federal reserve component, such as the U.S. Army Reserve, Navy Reserve, or similar branch, your active-duty pay does not qualify for this particular subtraction, even if your orders are issued under Title 10 and your service is performed in New York.

Employers who supplement employees' military pay

If your organization pays employees a supplement to make up the difference between military pay and civilian salary while they are on active duty, that supplemental amount does not qualify for the § 612(c)(8-b) subtraction either. The subtraction tracks the employee's militia membership status, not the source or purpose of the payment, so a supplement paid alongside disqualifying military pay is also disqualified.

Common questions

Q: Does every member of the U.S. armed forces called to active duty in New York qualify for the § 612(c)(8-b) subtraction?
A: No. The subtraction applies only to members of the New York state organized militia as defined in Military Law § 2(1) - the state Army and Air National Guard, inactive National Guard, Naval Militia, and New York Guard - not to members of federal reserve components like the U.S. Army Reserve.

Q: Gorman's orders were issued under Title 10 of the U.S. Code, just like the statute mentions - why didn't that qualify him?
A: Section 612(c)(8-b) requires both that the orders be issued under Title 10 (for the federal-service branch of the subtraction) and that the recipient be a member of the New York state organized militia. Gorman met the orders requirement but was a Master Sergeant in the U.S. Army Reserve, not a state organized militia member, so he failed the membership requirement.

Q: Did the supplemental pay from the New York State Police qualify for the subtraction even though the base military pay didn't?
A: No. The Department held that the supplemental pay Gorman received from the State Police while on active duty also did not qualify for the subtraction modification.

Q: Where is the New York state organized militia defined?
A: Military Law § 2(1) defines it to include the New York Army National Guard, the New York Air National Guard, the inactive National Guard, the New York Naval Militia, and the New York Guard (when such a state force is duly organized).

Citations and references

• Tax Law § 612(c)(8-b) - subtraction modification for active-service compensation received by a member of the New York state organized militia
• Military Law § 2(1) - definition of the New York state organized militia
• Military Law § 6(1) - state active duty orders (referenced as the alternative, non-federal basis for the § 612(c)(8-b) subtraction)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/income_ao_2007.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/income/a07_5i.pdf

Original ruling text

New York State Department of Taxation and Finance

TSB-A-07(5)I
Income Tax
August 27, 2007

Office of Tax Policy Analysis
Taxpayer Guidance Division
STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. I070522A

On May 22, 2007, a Petition for Advisory Opinion was received from Todd K. Gorman,
c\o Charles J. Balog, CPA, 10 Bevell Lane, North Syracuse, New York 13212-3507.
The issue raised by Petitioner, Todd K. Gorman, is whether military pay and other
compensation received as a result of being called to active service pursuant to federal active duty
orders issued in accordance with Title 10 of the United States Code is allowed to be subtracted
from federal adjusted gross income in computing New York adjusted gross income under section
612(c)(8-b) of the Tax Law.
Petitioner submitted the following facts as the basis for this Advisory Opinion.
Petitioner is a Master Sergeant in the United States Army Reserve. Pursuant to federal
active duty orders issued in accordance with Title 10 of the United States Code, Petitioner was
called to active service in January 2003. Petitioner was assigned to Fort Drum in New York.
During his mission at Fort Drum, Petitioner was temporarily assigned to Fort Dix in New Jersey.
Petitioner received active service military pay as a result of being called to active duty.
In addition, as an employee of the New York State Police, Petitioner received a
supplement to his military pay from the New York State Police while on active military duty.
Applicable law
Section 612(c) of the Tax Law provides, in part:
Modifications reducing federal adjusted gross income. There shall be subtracted
from federal adjusted gross income:
*

*

*

(8-b) Income received by an individual who is a member of the New York state
organized militia, as such term is defined in subdivision one of section two of the military
law, as compensation for performing active service within the state pursuant to either (i)
state active duty orders issued in accordance with subdivision one of section six of the
military law or (ii) active service of the United States pursuant to federal active duty
orders, for service other than training, issued in accordance with title 10 of the United
States code.
Section 2.1 of the Military Law provides:

-2­
TSB-A-07(5)I
Income Tax
August 27, 2007

The militia of the state shall be divided into the organized militia, the state reserve
list, the state retired list and the unorganized militia. The organized militia shall be
composed of the New York army national guard; the New York air national guard; the
inactive national guard; the New York naval militia; the New York guard whenever such
a state force shall be duly organized and such additional forces as may be created by the
governor.
Opinion
For purposes of the subtraction modification under section 612(c)(8-b) of the Tax Law,
compensation must be attributable to active service performed within New York State by a
member of the New York State organized militia as defined in section 2.1 of the Military Law.
Section 2.1 provides that members of the New York State organized militia include the New
York Army National Guard, the New York Air National Guard, the inactive National Guard, the
New York Naval Militia, and the New York Guard. Petitioner is a Master Sergeant in the United
States Army Reserve who was called to active duty and is not a member of the New York State
organized militia. Since the subtraction modification under section 612(c)(8-b) of the Tax Law
applies only to military pay received by a member of the New York State organized militia while
on active duty, Petitioner’s compensation for performing active service for the United States
Army does not qualify for the subtraction modification under section 612(c)(8-b). The
supplemental pay received from the New York State Police while on military active duty also
does not qualify for such subtraction modification.

DATED: August 27, 2007

NOTE:

/s/
Jonathan Pessen
Tax Regulations Specialist IV
Taxpayer Guidance Division

An Advisory Opinion is issued at the request of a person or entity. It is
limited to the facts set forth therein and is binding on the Department only
with respect to the person or entity to whom it is issued and only if the
person or entity fully and accurately describes all relevant facts. An
Advisory Opinion is based on the law, regulations, and Department
policies in effect as of the date the Opinion is issued or for the specific
time period at issue in the Opinion.