Metro-North Commuter Railroad asked whether four categories of employees who perform duties in both New York and Connecticut are 'regularly assigned' to more than one state under section 7 of the Amtrak Reauthorization and Improvement Act of 1990, so that their nonresident compensation is exempt from New York income tax and withholding.

Subject

Metro-North Commuter Railroad Co. requests an opinion on whether four categories of employees who perform duties in both New York and Connecticut are covered by section 7 of the Amtrak Reauthorization and Improvement Act of 1990, which exempts an interstate rail carrier employee's compensation from taxation by any state other than the employee's state of residence if the employee performs "regularly assigned duties" on a railroad in more than one state.

Plain-English summary

Metro-North Commuter Railroad Co. operates commuter trains in both New York and Connecticut and employs workers - on trains, in offices, and along its right-of-way - who perform duties in both states. Section 7 of the federal Amtrak Reauthorization and Improvement Act of 1990 ("ARIA"), which amended 49 U.S.C. § 11504(a), bars any state other than an employee's state of residence from taxing compensation paid to a rail carrier employee "who performs regularly assigned duties as such an employee on a railroad in more than one State." Metro-North asked the Department to classify four categories of its employees under that "regularly assigned" standard:

• Category A: system-wide jobs requiring duties in both New York and Connecticut within a given week, but without a fixed daily rotation (example: a Crew Foreman who doesn't follow a set daily schedule of crew-base stops but regularly works at both New York and Connecticut locations from day to day).
• Category B: jobs headquartered in one state but responsible for a specific portion of the rail line that crosses the state border, again without a fixed daily schedule (example: a track gang or signal maintainer assigned to a line segment running from a point in New York to a point in Connecticut).
• Category C: jobs headquartered in one state but responsible for duties across the entire Metro-North system in both states, where the specific timing of that work isn't fixed (example: an auditor who audits or oversees both states every year, but not on a set schedule).
• Category D: jobs responsible for a two-state or system-wide territory where travel between states happens purely on an as-needed basis (example: a Police Detective whose presence in either state depends on when an investigation happens to require it).

The Department drew the line between a systematic, job-description-level assignment to more than one state and a merely random one. 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 how much time is actually spent in each location; an employee with no standard route who ends up in different states only randomly is not "regularly assigned" in more than one state.

Applying that test, the Department held that Categories A and B are exempt: their job descriptions require them to work a set territory or line segment spanning both New York and Connecticut as an ordinary, systematic part of the job, even without a fixed daily schedule. So compensation paid to these nonresident employees on or after July 6, 1990 for such duties is not New York-source income, is not subject to New York State income tax, and is not subject to New York withholding.

Categories C and D, by contrast, are not exempt: although these employees also perform duties in both states, the specific timing and location of that work (when an audit happens to fall due, or where a detective's investigative need happens to arise) is random rather than systematic. These employees therefore do not meet ARIA's "regularly assigned" test, and their New York-source compensation remains subject to New York State income tax and New York withholding under Tax Law § 631(b).

The Department cautioned that whether a specific employee is genuinely "regularly assigned" to more than one state is ultimately a factual question, and that the four categories are illustrative examples rather than an exhaustive list (Tax Law § 171-Twenty-fourth; 20 NYCRR § 2376.1(a)). Nonresident employees who owe New York tax on New York-source income must file Form IT-203, and if withholding is not otherwise required, they must pay estimated tax.

This April 28, 1993 opinion is one of the earliest Metro-North ARIA rulings in this area, issued about six months before a similar Metro-North ARIA opinion (TSB-A-93(11)I) and roughly three years before TSB-A-96(5)I. Its broad "regularly assigned duties" test - covering any employee whose job description systematically spans a territory or line segment crossing the state border - was later narrowed on a prospective basis by a 1999 "Modified Advisory Opinions" letter, which limited the ARIA exemption on the New Haven line to "train and engine" and "Maintenance of Way" positions only, effective for tax years from 2000 forward. This 1993 opinion is one of the four prior opinions that 1999 letter identifies as being modified.

What this means for you

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

If you administer payroll or job classifications for an interstate rail carrier operating across state lines, this opinion shows how the Department distinguishes an exempt "regularly assigned" multi-state job from a taxable one: look at whether the job description itself systematically requires work in a set territory or line segment spanning more than one state (exempt, like Categories A and B here), versus whether multi-state work instead arises only randomly or as investigative/audit need dictates (not exempt, like Categories C and D). Keep in mind that this specific opinion's broad test was later narrowed prospectively, for tax years 2000 forward, by the 1999 Modified Advisory Opinions letter limiting the New Haven line exemption to train-and-engine and Maintenance of Way positions.

Nonresident rail employees whose assignments span New York and another state

If you are a nonresident employee of an interstate rail carrier and your job requires you to work a fixed territory or line segment that happens to cross into New York, your New York-source compensation may be exempt from New York income tax and withholding under ARIA, even if you don't have a fixed daily schedule for which state you're in. But if your presence in New York only arises randomly or as needed (rather than as a systematic part of your job description), your New York-source compensation remains taxable, and you'll need to file Form IT-203 and pay estimated tax if withholding isn't otherwise handled.

Common questions

Q: What is the difference between Categories A/B and Categories C/D that led to opposite outcomes?
A: Categories A and B involve job descriptions that systematically require work in a set territory or line segment spanning both New York and Connecticut - the multi-state work is baked into the job itself, even without a fixed daily schedule. Categories C and D involve employees who also work in both states, but only on a random or as-needed basis (an audit's timing, or where an investigation happens to lead) rather than as part of a fixed territorial assignment. ARIA's "regularly assigned" test turns on that systematic-versus-random distinction, not on how much time is spent in each state.

Q: Does an employee need a fixed daily schedule alternating between states to qualify as "regularly assigned"?
A: No. The Department specifically held that Categories A and B qualify even though neither follows a fixed daily schedule - what matters is that the job description requires systematic work in more than one state, regardless of the percentage of time spent in each location.

Q: Does this opinion still reflect current law for Metro-North's New Haven line employees?
A: Not fully. This 1993 opinion's broad "regularly assigned duties" test was one of four prior opinions later narrowed prospectively by a 1999 Modified Advisory Opinions letter, which limited the ARIA exemption on the New Haven line to "train and engine" and "Maintenance of Way" positions, effective for tax years 2000 and later.

Q: What must a nonresident employee do if their compensation doesn't qualify for the ARIA exemption?
A: They must file New York Form IT-203, Nonresident and Part-Year Resident Income Tax Return, and report all New York-source income. If New York tax isn't otherwise withheld from that compensation, the employee must pay estimated tax.

Q: Is this opinion binding on other rail carriers or employees who weren't part of the petition?
A: No. An Advisory Opinion binds the Department only as to the petitioner - here, Metro-North Commuter Railroad Co. - and only based on the facts presented, per Tax Law § 171-Twenty-fourth and 20 NYCRR § 2376.1(a). The Department also noted that whether any particular employee is "regularly assigned" to more than one state is ultimately a factual determination beyond what an advisory opinion can resolve in the abstract.

Citations and references

• 49 U.S.C. § 11504(a) - as amended by ARIA, bars a state other than an employee's state of residence from taxing compensation paid to a 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 amending 49 U.S.C. § 11504(a), effective for compensation paid on or after July 6, 1990
• Tax Law § 631(b) - defines New York-source income of a nonresident, applied here to compensation that does not qualify for the ARIA exemption
• Tax Law § 605(b)(1) - defines nonresident individual for New York personal income tax purposes
• Tax Law § 171-Twenty-fourth and 20 NYCRR § 2376.1(a) - limit an Advisory Opinion to the facts presented and to the petitioner requesting it
• 1999 Modified Advisory Opinions letter - later narrowed this opinion's "regularly assigned" test prospectively, limiting the New Haven line ARIA exemption to train-and-engine and Maintenance of Way positions for tax years 2000 forward

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_3i.pdf

Original ruling text

New York State Department of Taxation and Finance

TSB-A-93 (3) I
Income Tax
April 28, 1993

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

PETITION NO. I930210A

On February 10, 1993, a Petition for Advisory Opinion was received from
Metro-North Commuter Railroad Co., 347 Madison Avenue, New York, New York 10017.
The issue raised by Petitioner, Metro-North Commuter Railroad Co., 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 four categories of
employees are covered by section seven of the Act:
A.

TP-9 (9/88)

Jobs which involve duties which cover the entire Metro-North
system (New York and Connecticut), which require the incumbent
to perform duties in both states within a given week, although
not on a fixed daily schedule. For example, a Crew Foreman
position does not follow a fixed daily schedule of appearances
at each crew base (i.e. every Tuesday in New Haven), but the
incumbent regularly works at both Connecticut and New York
locations from day to day during each week so that during a
given week he/she will spend some time in both Connecticut and
New York.

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TSB-A-93 (3) I
Income Tax
April 28, 1993

B.
Jobs which report to a headquarter location in one state and
are responsible for performing duties on a specified portion of the
railroad line encompassing portions of both New York and
Connecticut. Although such employees do no work in both states on a
fixed daily schedule, they will spend time in both states during the
year. For example, a track gang or signal maintainer position whose
assigned portion of the railroad line is from a point in New York to
a point in Connecticut.
C.

Jobs which report to a headquarters in one state, but a
reresponsible for specific duties throughout the entire MetroNorth system in both states. For example, an auditor who, on
an annual basis will perform audits and/or auditing oversight
in both states, although when in that year those audits or
oversight will be performed is not fixed.

D.

Jobs which are responsible for performing duties for a
territory encompassing areas in two states or the entire
Metro-North system which travel within states on an as-needed
basis. For example, a Police Detective responsible for
investigations in two states whose presence in either state is
determined by when the need for investigations arises.

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 in accordance with the act, 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 consideredto be performin "regularly assigned"
duties in more than one state.
Accordingly, with respect to categories A a n d B a b o ve, t e N e w Y o r k
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 su,:h 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.
With respect to New York nonresident employees referred to in categories
C and D above, who are assigned duties on a random basis, even if duties are
performed in both New York State and Connecticut, such employees do not meet the

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Income Tax
April 28, 1993

requirements of section seven of the Act exempting such employees from New York
State income tax. The compensation paid to such an employee 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.
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 of 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: April 28, 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.