Is a rate-regulated carrier of handicapped passengers in wheelchair vans classed as a 'taxicab' or an 'omnibus' for sections 183 and 184, and is it therefore taxed under Article 9-A?
Plain-English summary
We Care Transportation carries handicapped passengers in wheelchair-equipped vans throughout Erie County under a Department of Transportation certificate of public convenience and necessity, at fares set in agreement with the Department of Social Services and approved by DOT (it cannot change them without approval). It asked whether it is a "taxicab" or an "omnibus" for sections 183 and 184 of Article 9 -- which matters because those sections tax taxicab/omnibus corporations, but sections 183.1(c) and 184.2(a) shift omnibus corporations to Article 9-A during any period the New York motor fuel tax exceeds two cents per gallon.
It is an omnibus, taxed under Article 9-A. It is not a taxicab: a taxicab is licensed by a local authority to operate at a fixed fare, which We Care is not. Because it is a rate-regulated carrier of passengers by motor vehicle (regulated by DOT under Article 7 of the Transportation Law, and an "omnibus carrier" under section 282.9 of Article 12-A), it is classed as an omnibus for sections 183/184 -- the controlling factor being strict rate regulation (per the 1960 legislative history). This holds even though its vans do not meet the separate Motor Fuel Tax Regulations definition of omnibus (more than seven seats). As an omnibus, while the motor fuel tax exceeds two cents per gallon, it is taxed under Article 9-A rather than sections 183 and 184.
What this means for you
Rate regulation makes a passenger carrier an "omnibus"
For sections 183/184, the key to omnibus classification is that the carrier is a rate-regulated carrier of passengers by motor vehicle -- not the size or type of vehicle.
Not a taxicab without a local fixed-fare license
A taxicab is licensed by a local authority to operate at a fixed fare. A DOT-certificated, DSS-rate carrier is not a taxicab.
Omnibus corporations are taxed under Article 9-A (under current fuel-tax rates)
While the New York motor fuel tax exceeds two cents per gallon, an omnibus corporation is taxed under Article 9-A instead of sections 183 and 184.
Common questions
Q: My vans are small -- can I still be an 'omnibus'?
A: Yes. The Motor Fuel Tax Regulations' 7+-seat definition does not control here; rate regulation as a passenger carrier does.
Q: Am I a taxicab?
A: Not unless a local authority licenses you to operate at a fixed fare. A DOT certificate with DSS-set rates is not that.
Q: Which tax do I actually pay?
A: Article 9-A, for as long as the New York motor fuel tax exceeds two cents per gallon.
Citations and references
Statutes, regulations, and authorities:
- Tax Law section 209.4 (a corporation taxable under sections 183/184 is not taxed under Article 9-A)
- Tax Law sections 183 and 184 (franchise taxes on corporations principally engaged in a taxicab or omnibus business)
- Tax Law sections 183.1(c) and 184.2(a) (omnibus corporations taxed under Article 9-A while the motor fuel tax exceeds two cents per gallon)
- Tax Law section 282.9 (Article 12-A omnibus carrier); section 282.10 (taxicab licensee -- licensed by local authority at a fixed fare)
- Transportation Law Article 7 (carriers of passengers by motor vehicle); 20 NYCRR 410.2(m)(2) (Motor Fuel Tax Regulations omnibus -- 7+ seats)
Source
- Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/corporation_ao_1995.htm
- Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/corporation/a95_10c.pdf
Original ruling text
New York State Department of Taxation and Finance
Taxpayer Services Division
Technical Services Bureau
TSB-A-95 (10) C
Corporation Tax
July 13, 1995
STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION
PETITION NO. C950207A
On February 7, 1995, a Petition for Advisory Opinion was received from We Care
Transportation, Inc., 2950 Seneca Street, West Seneca, New York 14224.
The issue raised by Petitioner, We Care Transportation, Inc., is whether it is classed as
conducting a taxicab or omnibus business for the purposes of sections 183 and 184 of Article 9 of
the Tax Law.
Petitioner is a New York corporation which was incorporated on January 9, 1984. Petitioner
was issued, by the New York State Commissioner of Transportation, a certificate of public
convenience and necessity to operate a common carrier of passengers for the transportation of
handicapped persons, in vehicles with an adult seating capacity not to exceed twenty passengers,
exclusive of the driver, pursuant to arrangements with individuals or third parties, between all points
in Erie County. Petitioner is required, by the New York State Department of Motor Vehicles, to
comply with the special requirements for bus drivers contained in Article 19-A of the Vehicle and
Traffic Law.
Petitioner owns and uses a fleet of vehicles or vans which have been remodeled to
accommodate the wheelchairs used by its handicapped passengers. The vans have an average seating
capacity of five wheelchairs, with the exception of one van, which has a seating capacity of ten.
Petitioner has an agreement with the Department of Social Services which regulates the fees
that Petitioner may charge for its services. The agreement provides that Petitioner will charge
$26.00, one way, within the City of Buffalo, plus a limit of $1.50 per mile outside of the City of
Buffalo. There are also limitations on charges for additional passengers. If a trip is from one suburb
to another suburb, the fee is the base rate of $26.00 or mileage, whichever is greater. For trips that
originate in the suburbs but necessitate travel into the City of Buffalo, the fee is the base rate of
$26.00, plus mileage. Petitioner is authorized to charge the above specified rates by the Department
of Transportation, and may not vary the rates without the Department of Transportation's prior
approval.
Section 209.1 of Article 9-A of the Tax Law imposes an annual franchise tax on a domestic
corporation for the privilege of exercising its corporate franchise. Section 209.4 of the Tax Law,
provides that corporations liable to tax under sections 183 and 184 of Article 9 of the Tax Law are
not subject to tax under Article 9-A.
TP-9 (9/88)
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TSB-A-95 (10) C
Corporation Tax
July 13, 1995
Sections 183 and 184 of Article 9 of the Tax Law impose franchise taxes on a domestic
corporation formed for or principally engaged in the conduct of a taxicab or omnibus business.
However, sections 183.1(c) and 184.2(a) of the Tax Law, respectively, provide that during the period
that the New York State tax on motor fuel, computed without regard to any reimbursement allowable
under section 289-c.3(d) of the Tax Law, exceeds two cents per gallon, corporations classed as
"taxicab" and omnibus", other than corporations described in sections 183.9 and 184.2(b) of the Tax
Law, respectively, shall be taxed under the provisions of Article 9-A of the Tax Law.
Sections 183 and 184 of the Tax Law do not contain any guidance for classing a corporation
as a "taxicab" or an "omnibus" However, since the exemption described in sections 183.1(c) and
184.2(a), respectively, is dependent on the New York State tax on motor fuel (Article 12-A of the
Tax Law) exceeding two cents per gallon, it is appropriate to look for guidance in Article 12-A of
the Tax Law.
Section 282.10 of Article 12-A of the Tax Law, added by the Laws of 1959, Chapter 711, and
amended by the Laws of 1961, Chapter 169, defines "taxicab licensee" as every corporation,
company, association, partnership and person engaged in operating a taxicab, as defined in section
148-a of the Vehicle and Traffic Law, and licensed by local authorities as defined in section 122 of
the Vehicle and Traffic Law to operate at a fixed rate of fare.
Section 148-a of the Vehicle and Traffic Law defines "taxicab" as every motor vehicle, other
than a bus, used in the business of transporting passengers for compensation, and operated in such
business under a license or permit issued by a local authority.
Herein, Petitioner is not licensed by a local authority. Petitioner's vehicles are not "taxis" and
Petitioner is not a "taxicab licensee" for purposes of section 282.10 of Article 12-A of the Tax Law.
Section 282.9 of Article 12-A of the Tax Law, added by the Laws of 1959, Chapter 641,
defines "omnibus carrier" as every person engaged in operating an omnibus line subject to the
supervision of the New York State Department of Public Service pursuant to Article 3-A of the
Public Service Law (now under the supervision of the Commissioner of Transportation) including
every person operating omnibuses used for the transportation of school children under a contract
made pursuant to the provisions of the Education Law.
Prior to March 1, 1971, an "omnibus carrier", as defined in section 282.9 of Article 12-A of
the Tax Law, was under the supervision of the Department of Public Service pursuant to Article 3-A
of the Public Service Law. Such Article was repealed by Chapter 267 of the Laws of 1970 when the
Commissioner of Transportation took over such supervision.
While omnibus carriers were under the supervision of the Department of Public Service,
section 2.29 of the Public Service Law, as added by Chapter 531 of the Laws of 1931, and in effect
until repealed in 1970, stated that the term "omnibus corporation" when used in the Public Service
Law, "includes every corporation, company, association, joint-stock association, partnership and
person, their lessees, trustees or receivers appointed by any court whatsoever, owning, leasing or
operating or proposing to own, lease or operate an omnibus line.
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TSB-A-95 (10) C
Corporation Tax
July 13, 1995
Section 2.28 of the Public Service Law, as amended by Chapter 633 of the Laws of 1955, in
effect until repealed in 1970, defined the term "omnibus line" when used in the Public Service Law,
as "a motor vehicle or motor vehicles, including trackless trolleys as defined in the vehicle and traffic
law, operated for the use and convenience of the public, usually along the same route or between
stated termini, or on a fixed or stated schedule, carrying passengers for hire, and the property and
equipment used in connection therewith."
Currently, Article 7 of the Transportation Law, contains the provisions for carriers of
passengers by motor vehicles. Pursuant to Article 7 of the Transportation Law, Petitioner was issued
a certificate of public convenience and necessity to operate as a common carrier of passengers for
the transportation of handicapped persons, in vehicles with an adult seating capacity not to exceed
twenty passengers, exclusive of the driver, pursuant to arrangements with individuals or third parties,
between all points in Erie County. Petitioner has an agreement with the Department of Social
Services with respect to the fees that Petitioner may charge for its services. Additionally, pursuant
to Article 7 of the Transportation Law, Petitioner's rates are approved by the Commissioner of
Transportation and Petitioner may not change the rates charged for such transportation without the
prior approval of the Department of Transportation.
There is no definition of "omnibus" or "omnibus carrier" in the Transportation Law, but
Petitioner is a carrier of passengers by motor vehicles and is regulated by the Department of
Transportation under Article 7 of the Transportation Law. Further, Petitioner would have been an
"omnibus corporation" for purposes of section 2 of the Public Service Law when it was in effect.
Chapter 1081 of the Laws of 1960 amended sections 183 and 184 of the Tax Law,
respectively, to provide that during the period that the New York State tax on motor fuel exceeds two
cents per gallon, corporations classed as omnibus shall be taxed under the provisions of Article 9-A
rather than sections 183 and 184 of the Tax Law. The memorandum in support of the Laws of 1960,
Chapter 1081, states, in part, that:
[the] consolidation, with respect to [omnibus] corporations, of all State taxes in
[Article 9-A] results in a more equitable and simplified method of taxation...
The substitution of [Article 9-A] for the existing combination of taxes on omnibus
corporations involves some measure of tax relief to corporations in a generally
depressed industry which daily provides essential transportation services to millions
of residents of our State. At the same time it assures a fair contribution from those
firms operating on profitable basis. Subject as they are to strict rate regulation, it is
in the public interest to afford these marginal corporations relief from governmentally
imposed costs which would eventually be passed on to the consumer of the services
(NY Legis Ann, 1960, p 590)
Pursuant to the memorandum in support of Chapter 1081 of the Laws of 1960, the exemption
from taxation under sections 183.1(c) and 184.2(a) of the Tax Law is applicable to an omnibus
corporation that is subject to strict rate regulation.
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TSB-A-95 (10) C
Corporation Tax
July 13, 1995
Herein, Petitioner meets the definition of "omnibus carrier" contained in section 282.9 of
Article 12-A of the Tax Law.
Section 410.2(m)(2) of the Motor Fuel and Diesel Motor Fuel Tax Regulations ("Motor Fuel
Tax Regulations"), promulgated in 1988, defines "omnibus" as every motor vehicle, with a seating
capacity of more than seven persons in addition to the driver, used in the business of transporting
passengers for hire. Such term does not include a taxicab.
Petitioner does not meet the definition of "omnibus" contained in section 410.2(m)(2) of the
Motor Fuel Tax Regulations which restricts an omnibus, for purposes of the tax on motor fuel, to
a motor vehicle with a seating capacity of more than seven persons, in addition to the driver.
However, such restriction is not contained in section 282.9 of Article 12-A of the Tax Law, nor in
Article 7 of the Transportation Law.
Petitioner is regulated by the Department of Transportation and Petitioner's rates are set in
agreement with the Department of Social Services and approved by the Department of
Transportation. Because of such strict rate regulation, it is appropriate to class Petitioner as an
"omnibus" for purposes of sections 183 and 184 of the Tax Law, even though Petitioner's vehicles
do not conform to the definition of omnibus for purposes of the Motor Fuel Tax Regulations.
Accordingly, for purposes of sections 183.1(c) and 184.2(a) of the Tax Law, Petitioner is not
classed as a "taxi", but is classed as an "omnibus" and during any period that the New York State tax
on motor fuel, computed without regard to any reimbursement allowable under section 289-c.3(d)
of the Tax Law, exceeds two cents per gallon, Petitioner is taxed under the provisions of Article 9-A
of the Tax Law rather than under section 183 and 184 of the Tax Law.
DATED: July 13, 1995
s/PAUL B. COBURN
Deputy Director
Taxpayer Services Division
NOTE: The opinions expressed in Advisory Opinions
are limited to the facts set forth therein.