Metro-North Commuter Railroad Company asked whether two categories of employees who work in both New York and Connecticut - (1) employees paid collectively-bargained travel time to reach a temporary out-of-state work assignment, and (2) employees who work a set schedule of days in New York and are 'on call' at home in Connecticut - qualify for the federal Amtrak Reauthorization and Improvement Act's exemption from New York income tax on compensation paid to interstate rail employees who perform 'regularly assigned duties' in more than one state.

Subject

Whether Metro-North Commuter Railroad Company's two categories of employees - those paid collectively-bargained travel time to a temporary out-of-state work site, and those working a systematic New York/Connecticut on-call schedule - are covered by section seven of the federal Amtrak Reauthorization and Improvement Act of 1990.

Plain-English summary

Metro-North Commuter Railroad Company operates commuter trains in both New York and Connecticut and employs people whose jobs take them across the state line - some on trains, some in offices, some along the right-of-way. In 1993, Metro-North asked the Department how a new federal law, the Amtrak Reauthorization and Improvement Act of 1990 ("ARIA," Pub. L. 101-322), applied to two specific groups of employees.

ARIA's section seven amended 49 U.S.C. § 11504(a) to say that no state may tax the compensation of a rail carrier employee who performs "regularly assigned duties ... on a railroad in more than one State," other than the state where that employee actually resides. The question was what "regularly assigned" means in practice.

The Department set out the governing test: an employee is regularly assigned to more than one state if the employee's job description requires performing services in at least two states on a systematic basis - it doesn't matter what percentage of time is spent in each state. But if an employee has no standard route and is sent to work in another state only randomly (for example, whenever and wherever a particular project happens to need someone), that employee is not "regularly assigned" in more than one state.

Applying that test, the Department reached two different answers for Metro-North's two employee categories. Category 1 - employees compensated under a collective bargaining agreement for travel time to reach a construction site outside their home state, such as a Connecticut-based conductor sent to flag trains at a specific New Rochelle, New York construction project - are not exempt. They perform all of their actual work duties in a single state at any given time; merely traveling through or from another state to get there isn't itself "performing duties" in that state, and the assignment to a particular, temporary project site is random rather than systematic. Their New York-source pay remains taxable by New York and subject to withholding under Tax Law § 631(b).

Category 2 - employees who work a specified number of days per week in New York and spend a specified number of other days per week on call at home in Connecticut, being paid for both - are exempt. That schedule is systematic and built into the job itself, satisfying ARIA's "regularly assigned" standard regardless of how the time actually splits between states. Their compensation paid on or after July 6, 1990 is not New York-source income and is not subject to New York income tax or withholding.

The Department cautioned that whether any particular employee is truly "regularly assigned" to more than one state is ultimately a factual question that can't be fully resolved in the abstract; these two categories were illustrative examples rather than an exhaustive rule for every job title. Nonresident employees whose income remains New York-taxable must file Form IT-203, and must pay estimated tax if withholding doesn't otherwise apply.

This is the original, foundational Metro-North ARIA opinion - issued October 19, 1993, not long after ARIA itself took effect. It's worth knowing that this opinion's broad "regularly assigned duties" test was later narrowed prospectively: a 1999 Modified Advisory Opinion (covering taxable years beginning on or after January 1, 2000) formally revisited this opinion along with three other prior Metro-North rulings and restricted the ARIA exemption to specific "train and engine" and "Maintenance of Way" job categories on the New Haven line. So while the reasoning here still illustrates how the systematic-versus-random distinction works, employers and employees relying on ARIA exemptions for tax years 2000 and later should be aware that the scope was later tightened beyond what this 1993 opinion describes.

What this means for you

Interstate rail-carrier payroll and HR administrators classifying multi-state job categories

When you're deciding whether a job category qualifies for the ARIA multi-state tax exemption, look at the job description itself, not just where the employee happens to travel. A job that systematically requires work in two states - a fixed weekly split between New York duties and Connecticut on-call duties, for example - can qualify no matter how the time is actually divided. But a job that's based in one state, with occasional cross-border trips to reach whatever site a project happens to be at, does not qualify - and paying travel time under a union contract doesn't change that, because travel itself isn't "performing duties" in the destination state.

Nonresident rail employees who split work time between New York and another state

If your job requires you, by its very design, to regularly perform services in both New York and another state (not just occasional random travel), you may be exempt from New York income tax and withholding on that pay under this 1993 reasoning - provided you're not a New York resident under Tax Law § 605(b)(1). If your work is really based in one state and you just travel through or from another state to get to occasional out-of-state assignments, expect your New York-source pay to remain taxable, and be prepared to file Form IT-203 and pay estimated tax if withholding isn't happening automatically.

Common questions

Q: What's the actual legal test the Department used to decide whether someone is "regularly assigned" to more than one state?
A: An employee is "regularly assigned" duties in more than one state if the employee's job description requires performing services in at least two states on a systematic basis, regardless of what percentage of time is spent in each state. An employee with no standard route who's assigned multi-state duties only randomly is not "regularly assigned" in more than one state.

Q: Why doesn't paid travel time count as "performing duties" in the destination state?
A: The Department reasoned that an employee who performs all actual work duties in one state, but merely travels to and from another state to get there, is not thereby performing duties in more than one state - even if the collective bargaining agreement requires compensating that travel time. The compensated travel is incidental to duties performed at a single work site, not itself multi-state duty performance.

Q: What's the difference between the "random" travel-only exposure in Category 1 and the "systematic" multi-state duty in Category 2?
A: Category 1's conductor is assigned to a specific New York construction site only for as long as that project lasts, and where that site is located is essentially happenstance from one project to the next - that's random. Category 2's on-call employees have a set weekly pattern built into the job itself (specified New York workdays, specified Connecticut on-call days, paid for both) - that's systematic and built into the job description, which is what ARIA's exemption requires.

Q: If an employee's New York-source pay isn't covered by the ARIA exemption, what tax obligations apply?
A: That compensation is income from New York sources under Tax Law § 631(b) and is subject to New York State income tax and New York withholding. The nonresident employee must file Form IT-203 (Nonresident and Part-Year Resident Income Tax Return), and if withholding isn't otherwise required, must pay estimated tax.

Q: Does this 1993 opinion still fully describe current law?
A: Not entirely. This opinion's broad "regularly assigned duties" analysis was later narrowed prospectively by a 1999 Modified Advisory Opinion, effective for taxable years beginning on or after January 1, 2000, which formally revisited this and three other prior Metro-North opinions and limited the ARIA exemption to specific "train and engine" and "Maintenance of Way" positions on the New Haven line. The reasoning here remains useful for understanding the systematic-versus-random distinction, but the scope of who actually qualifies was later tightened.

Citations and references

• 49 U.S.C. § 11504(a) - bars states other than an employee's state of residence from taxing compensation paid to an interstate rail carrier employee who performs regularly assigned duties in more than one state
• Pub. L. 101-322 (Amtrak Reauthorization and Improvement Act of 1990), § 7 - the federal provision that added this multi-state tax protection, applicable to compensation paid on or after July 6, 1990
• Tax Law § 631(b) - defines New York-source income for nonresidents; governs taxation of compensation that does not qualify for the ARIA exemption
• Tax Law § 605(b)(1) - defines nonresident status for New York personal income tax purposes
• Tax Law § 171-Twenty-fourth - limits advisory opinions to the specific facts presented
• 20 NYCRR § 2376.1(a) - regulatory counterpart governing the scope and effect of advisory opinions

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/income_ao_1993.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/income/a93_11i.pdf

Original ruling text

New York State Department of Taxation and Finance

TSB-A-93 (11) I
Income Tax
October 19, 1993

Taxpayer Services Division
Technical Services Bureau
STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. I930722A

On July 22, 1993, a Petition for Advisory Opinion was received from MetroNorth Commuter Railroad Company, 347 Madison Avenue, New York, New York 10017.
The issue raised by Petitioner, Metro-North Commuter Railroad Company, is
how the application of the Amtrak Reauthorization and Improvement Act of 1990
(hereinafter the "Act") affects employees traveling to more than one state during
the course of their employment, specifically the meaning of the term "regularly
assigned" and the types of occupations and work schedules covered by the Act.
Petitioner operates commuter train service within New York State and the
State of Connecticut. Petitioner employs a number of employees who perform work
in both states, some of whom perform this work on trains and some of whom perform
this work in offices or along Petitioner's right-of-way.
Federal Public Law 101-322, the Act, amended various provisions of Title
49 of the United States Code relating to state and local taxation of compensation
paid to employees of interstate rail carriers, interstate motor carriers and
interstate motor private carriers and applies to compensation paid on or after
July 6, 1990.
Section seven of the Act amends section 11504(a) of Title 49 of the United
States Code with regard to a rail carrier providing transportation subject to the
jurisdiction of the Interstate Commerce Commission under Subchapter I of Chapter
105 of such Title 49 and states, in pertinent part, that:
No part of the compensation paid by a rail carrier. . .to an
employee who performs regularly assigned duties as such an 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 requests an opinion as to whether the following two categories
of employees are covered by section seven of the Act:
1.
Collective bargaining requires Petitioner in certain situations to
compensate employees for traveling to and from their work locations. As an
example: A conductor, whose crew base is located in Stanford, Connecticut, is
instructed to perform flagging service (protection for train movements in the
vicinity of a construction site) at New Rochelle, New York, at 8:00 a.m. on a
continuing basis for the period of the construction.
In such a case, the
employee takes a train that leaves Stanford, Connecticut, at 7:00 a.m. and
arrives in New Rochelle, New York at 7:45 a.m.
He or she reports to the work
TP-9 (9/88)

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TSB-A-93 (11) I
Income Tax
October 19, 1993

site at 8:00 a.m. and performs service until 4:00 p.m. Upon completion of the
assignment, the conductor leaves New York at 4:30 p.m. by train back to
Connecticut where he or she arrives at 5:30 p.m. The employee is compensated for
a total of 10 hours and 30 minutes. Eight hours of that time period represents
the work actually performed, and the balance of 2 hours and 30 minutes represents
the travel time to and from the crew base and work location.

2. Certain positions at Metro-North require that individuals be "on call"
   and available to report for work if needed. In such instances the individuals
   will remain at home while "on-call"
   For instance, an individual who is a
   resident of Connecticut may work a specified number of days of the week in New
   York and spend a specified number of days of the week at home "on-call" He/she
   will be paid for both the days worked in New York and the days spent at home in
   Connecticut on call.
   In accordance with the provisions of the Act, if an employee of Petitioner
   is not a resident of New York State for personal income tax purposes under
   section 605(b)(1) of the Tax Law, and such employee is paid compensation for
   regularly assigned duties performed in New York State and one or more other
   states, the compensation paid on or after July 6, 1990 does not constitute income
   derived from New York State sources and is not subject to New York State income
   tax, even though the employee performed services in New York State.
   When applying the provisions of the Act for New York State income tax
   purposes, such an employee is considered to be performing "regularly assigned"
   duties in more than one state if such employee's job description requires the
   employee to perform services in at least two states on a systematic basis
   regardless of the percentage of time spent at each location. If an employee has
   no standard route and is assigned duties in more than one state on a random
   basis, that employee would not be considered to be performing "regularly
   assigned" duties in more than one state.
   Herein, the employees in category "1" are not performing duties while
   traveling to and from their work locations. Therefore, an employee who performs
   all of his/her duties in one state but travels to/from another state to perform
   such duties is not performing duties in more than one state. Additionally, in the
   example, a conductor whose crew base is located in Connecticut but performs
   flagging service at a construction site in New York is not considered to be
   performing "regularly assigned" duties in more than one state because the duties
   are assigned on a random basis, depending on where the construction site is and
   the duration of such construction. The employees in category "2" are performing
   duties in more than one state when they perform services in New York State a
   specified number of days of the week and are "on-call" in Connecticut a specified
   number of days of the week and such employees are paid for both the days worked
   and the days on-call.
   Accordingly, with respect to New York nonresident employees referred to in
   category "1" above, who (a) are regularly assigned to perform all of their duties
   in New York State but travel to/from Connecticut to perform such duties, or (b)
   are performing duties in both New York State and Connecticut but are assigned

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TSB-A-93 (11) I
Income Tax
October 19, 1993

such duties on a random basis do not meet the requirements of section seven of
the Act exempting such employees from New York State income tax.
The
compensation paid to such employees on and after July 6, 1990 for duties
performed in New York State constitutes income from New York sources pursuant to
section 631(b) of the Tax Law. Such compensation is subject to New York State
income tax and New York withholding requirements.
With respect to category "2" above, the New York nonresident employees who
are regularly assigned to perform duties in both New York State and Connecticut
will meet the requirements of section seven of the Act exempting such employees
from New York State income tax. Therefore, the compensation paid on or after
July 6, 1990 for the performance of such duties by such New York nonresident
employees will not be subject to New York State income tax.
Further, such
compensation paid on or after July 6, 1990 is not subject to New York State
withholding requirements.
The determination of whether an employee is "regularly assigned" duties to
be performed in New York State and one or more other states is a factual matter
not susceptible of determination in an advisory opinion. An advisory opinion
merely sets forth the applicability of pertinent statutory and regulatory
provisions to a "specified set of facts" Tax Law, §171. Twenty-fourth; 20 NYCRR
2376.1(a).
It should be noted, that New York nonresident employees who receive
compensation subject to New York State income tax are required to file Form IT­
203, Nonresident and Part-Year Resident Income Tax Return, and report to New York
any items on income derived from or connected with New York sources. If tax is
not required to be withheld, estimated tax is required to be paid.

DATED: October 19, 1993

s/PAUL B. COBURN
Deputy Director
Taxpayer Services Division

NOTE: The opinions expressed in Advisory Opinions
are limited to the facts set forth therein.