Do Metro-North Commuter Railroad maintenance-of-equipment workers who sometimes work in both New York and Connecticut owe income tax only to their home state, or to every state where they perform services?

Plain-English summary

A labor union representing Metro-North Commuter Railroad maintenance-of-equipment workers asked whether its members are required to pay state income tax to every state where they work, or only to the state where they reside. The union's members work in Stamford, Connecticut and at the Sunnyside Yard in New York City, and while each is regularly assigned to one state, Metro-North frequently directs them to work in the other state as well.

The union pointed to the Amtrak Reauthorization and Improvement Act of 1990 (ARIA), which added 49 U.S.C. § 11502(a). That provision bars a state from taxing the compensation of a rail carrier employee whose "regularly assigned duties" are performed on a railroad in more than one state, except by the state where the employee resides. The Department had already addressed this exemption for Metro-North in a prior opinion, TSB-A-93(3.1)I, which limited it to employees whose duties regularly assign them to the New Haven Line - the only Metro-North line that runs between New York and Connecticut - and who either work on a locomotive, car, or other track-borne vehicle, or who are maintenance-of-way employees.

The Department concluded that the union's maintenance-of-equipment workers are not regularly assigned to the New Haven Line, so they fall outside that prior ruling and outside the ARIA exemption. It rejected the union's reliance on an Oregon Tax Court case, Department of Revenue v. Hughes, because that case interpreted a different ARIA provision - 49 U.S.C. § 11504(b)(1), covering employees who affect commercial motor vehicle safety - which has no bearing on rail employees under § 11502(a). As a result, the union's members must pay income tax to whichever state(s) they actually perform services in, in addition to their state of residence.

What this means for you

Railroad employees who cross state lines

Simply performing work in more than one state doesn't automatically exempt a railroad employee from paying income tax in each of those states. The ARIA exemption under 49 U.S.C. § 11502(a) only reaches employees whose regularly assigned duties put them on a railroad in more than one state - for Metro-North, that has been read narrowly to mean employees regularly assigned to the New Haven Line who work on a locomotive, car, or other track-borne vehicle, or who are maintenance-of-way employees. Workers outside that description, even if they occasionally cross into another state, remain taxable in every state where they perform services.

Unions and employers evaluating multistate tax exposure

Before assuming a federal statute shields employees from dual-state taxation, check whether the specific ARIA provision actually applies to the job duties at issue. A case interpreting one ARIA provision (like the motor-carrier-safety rule in § 11504(b)(1)) won't extend an exemption meant for a different provision (like the rail-employee rule in § 11502(a)).

Common questions

Q: Are all Metro-North employees who work in both New York and Connecticut exempt from dual-state income tax?
A: No. Only employees regularly assigned to the New Haven Line who work on a locomotive, car, or other track-borne vehicle, or who are maintenance-of-way employees, qualify for the ARIA exemption under 49 U.S.C. § 11502(a), per the Department's prior opinion TSB-A-93(3.1)I.

Q: Why doesn't the exemption cover these maintenance-of-equipment workers?
A: Because they are not regularly assigned to the New Haven Line - the only Metro-North line crossing between New York and Connecticut - even though they are sometimes directed to work in the other state.

Q: Did the Oregon Hughes case help the union's argument?
A: No. Hughes interpreted a different ARIA section, 49 U.S.C. § 11504(b)(1), which applies to employees affecting commercial motor vehicle safety, not to rail employees under § 11502(a).

Q: If the exemption doesn't apply, where do these workers pay income tax?
A: They pay income tax to the state(s) in which they actually perform services, as well as to their state of residence.

Citations and references

• 49 U.S.C. § 11502(a) - bars states from taxing compensation of a rail carrier employee regularly assigned to duties on a railroad in more than one state, other than the state of residence
• 49 U.S.C. § 11504(b)(1) - separate ARIA provision covering employees who affect commercial motor vehicle safety in more than one state; distinguished as inapplicable here
• Pub. L. 101-322 - the Amtrak Reauthorization and Improvement Act of 1990 (ARIA), which added the rail-employee tax provision
• TSB-A-93(3.1)I - prior Department advisory opinion limiting the Metro-North exemption to New Haven Line employees working on a locomotive, car, or other track-borne vehicle, or maintenance-of-way employees
• Department of Revenue v. Hughes, Or. Tax Ct. No. TC 4460 (Mar. 14, 2001) - cited by petitioner but held inapplicable, as it construed a different ARIA provision

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/income_ao_2011.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/income/a11_7i.pdf

Original ruling text

New York State Department of Taxation and Finance

TSB-A-11(7)I
Income Tax
October 6, 2011

Office of Counsel
Advisory Opinion Unit
STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. I101005A

The Department of Taxation and Finance received a Petition for Advisory Opinion from
name redacted. Petitioner asks whether employees of the Metro-North Commuter Railroad, who
provide maintenance services on rail line equipment of Metro North and are members of Petitioner’s
labor union are required to pay state income taxes to the state(s) where the employees work or the
state where they reside. Petitioner’s basis for this request is the Amtrak Reauthorization and
Improvement Act of 1990, PL 101-322 (ARIA). The ARIA restricts states from imposing income tax on
employees who perform regular assigned duties on a railroad unless the employees are a resident of the
state.

We conclude that Petitioner’s union members, who are employed by the Metro-North
Railroad, are not regularly assigned to duties on a railroad in more than one state as required by
ARIA (49 USC §11502(a)). Therefore, Petitioner’s union members are required to pay income
tax to the State(s) in which they work, and to the State in which they reside.
Facts
The members of Petitioner’s union are employed as maintenance of equipment workers
for the Metro-North Commuter Railroad in Stamford, Connecticut and the Sunnyside Yard in
New York City. These union members are regularly assigned to work in either New York or
Connecticut; however, they are also directed by the needs of the Metro-North Railroad to work
in the other state (Connecticut or New York) on a frequent basis. But, unlike operations workers
or maintenance of way workers for Metro North, who are regularly assigned to work on the New
Haven Line and work in both New York and Connecticut, Petitioner’s members who perform
work in both New York and Connecticut are currently required to pay income taxes to the state
where they perform services and not solely to the state where they reside.
Analysis
Previously, this Department issued TSB-A-93(3.1)I, which modified four earlier
Advisory Opinions on this issue. TSB-A-93(3.1) I concluded, pursuant to Title 49 USC
§11502(a), that only Metro-North employees whose duties regularly assign them to work on the
New Haven Line (the only line that travels between New York and Connecticut) and that work
on a locomotive, car, or other track-borne vehicle, or are maintenance of way employees, qualify
for the income tax exemption. Title 49 USC §11502(a) states that:

-2-

TSB-A-11(7)I
Income Tax
October 6, 2011

No part of the compensation paid by a rail carrier providing transportation subject
to the jurisdiction of the Board under this part to an employee who performs
regularly assigned duties as such employee on a railroad in more than one State
shall be subject to the income tax laws of any State or subdivision of that State,
other than the State or subdivision thereof of the employee’s residence.
(emphasis added)
Petitioner’s union members are maintenance of equipment workers and are not regularly
assigned to work on the New Haven Line. Petitioner, however, cites to an Oregon Tax Court
decision, Department of Revenue v. Hughes, (TC 4460), March 14, 2001), in support of his
position that the income tax provisions of Title 49 USC §11502(a) apply to his members. The
Hughes case, however, involved a different provision of ARIA. The taxpayer in Hughes was an
employee who “directly affects commercial motor vehicle safety in the course of employment.”
In order to be exempt under ARIA, this type of employee must perform regularly assigned duties
in two or more states as such an employee with respect to a motor vehicle. Title 49 USC §
11504(b)(1) (1995). This case has no relevance to this Petition because a different provision of
ARIA applies to employees of Metro-North. That provision, quoted above, requires an
employee to perform regularly assigned duties as such employee on a railroad in more than one
state. Accordingly, because Petitioner’s union members are not employees who perform
regularly assigned duties on a railroad in more than one state, they are not covered by 49 USC
§11502(a). Therefore, Petitioner’s members must pay tax in both their resident state and the
state in which they work. If, however, Petitioner’s members were regularly assigned to work on
the New Haven Line, then the provisions of Title 49 USC §11502(a) would apply to them.

DATED: October 6, 2011

NOTE:

/S/
DEBORAH R. LIEBMAN
Deputy Counsel

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.