My company's only office is in Connecticut, but eight of my twelve employees (including my CEO) are New York residents who don't work from home. Does that make my company liable for New York's MCTMT?

Plain-English summary

A domestic corporation's only physical facility is in Stamford, Connecticut. All twelve of its employees work out of that facility, including eight New York State residents (among them the company's CEO), some of whom live within the MCTD. The company already withholds New York State income tax for its resident employees, but its Operations Manager confirmed that "typically none of our NY employees work from home." The company asked whether it is subject to MCTMT.

MCTMT applies to employers "engaged in business within" the MCTD (Tax Law § 801(a)) — a phrase the statute doesn't define. The Department borrowed the analogous "carried on" standard used for the personal income tax on nonresidents (Tax Law § 806 extends Article 22 concepts to MCTMT administration), under which a business is "carried on" in New York when the taxpayer maintains an office, shop, agency, or similar place where its affairs are "systematically and regularly carried on... with a fair measure of permanency and continuity" (20 NYCRR § 132.4(a)(2)).

Applying that test, the Department found the company not engaged in business in the MCTD: it has no place of business in New York, its employees' base of operations and the place from which the company directs and controls them is Connecticut, its seat of management is Connecticut, and — critically — an employee's home isn't treated as an "office" of the employer unless it's actually used in the regular course of the employer's business, which wasn't the case here since the New York employees don't work from home. The fact that some employees (including the CEO) reside in the MCTD and have their wages separately taxed under New York's personal income tax didn't change the outcome, because their services were performed in Connecticut, not New York.

What this means for you

Out-of-state employers with remote or traveling New York-resident employees

Simply employing people who live in the MCTD doesn't create MCTMT liability if your company has no office or other regularly-conducted place of business there and those employees don't actually work from home or otherwise perform services within the district. The test looks at where the work happens and where control is exercised, not where employees sleep.

Companies allowing New York-resident employees to work from home

If your remote employees actually do use their home as a regular place of business (not just occasional convenience), that home could be treated as a company "office" within the MCTD, potentially changing this analysis. Keep clear records of where work is actually performed.

Common questions

Q: Does withholding New York income tax for an employee mean my company owes MCTMT too?
A: Not automatically. Income tax withholding for a resident employee is a separate question from whether the employer is "engaged in business" in the MCTD — this ruling found the company owed no MCTMT even while properly withholding income tax for its New York-resident employees.

Q: What test does the Department use for "engaged in business" under MCTMT?
A: It borrows the personal income tax's "carried on" business standard — maintaining an office or other place where the employer's affairs are systematically and regularly conducted, with a fair measure of permanency, in the MCTD.

Q: Would the answer change if the New York employees worked from home?
A: Possibly. A home office used regularly in the course of the employer's business can be treated as an office of the employer — but the Department's conclusion here relied specifically on the fact that these employees typically did not work from home.

Q: Can I rely on this ruling for my own company's situation?
A: No. This advisory opinion binds the Department only as to the petitioner and the specific facts described.

Citations and references

Statutes and regulations:

• Tax Law § 800(b) (MCTMT "employer" definition: § 671 withholding + payroll expense threshold)
• Tax Law § 800(d) ("covered employee" definition)
• Tax Law § 801(a) (MCTMT imposed on employers "engaged in business within" the MCTD)
• Tax Law § 804(a) (quarterly remittance)
• Tax Law § 806 (extends Article 22 personal income tax concepts to MCTMT administration)
• 20 NYCRR § 132.4(a)(2) ("carried on" business standard for nonresident personal income tax)
• Public Authorities Law § 1262 (MCTD counties)

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/mctmt_ao.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/mctmt/a13_2mctmt.pdf

Original ruling text

New York State Department of Taxation and Finance
TSB-A-13(2)MCTMT
Metropolitan Commuter
Transportation Mobility Tax
October 17, 2013

Office of Counsel
Advisory Opinion Unit

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. M110524A

The Department of Taxation and Finance received a Petition for Advisory Opinion from
name and address redacted. Petitioner asks whether it is subject to the Metropolitan Commuter
Transportation Mobility Tax (MCTMT).
We conclude that Petitioner is not subject to the MCTMT, because it is not engaged currently
in business in the Metropolitan Commuter Transportation District (MCTD).
Facts
Petitioner is a domestic corporation whose only facility is located in Stamford, Connecticut.
Petitioner has twelve employees, all of whom work out of the Stamford facility. Eight of Petitioner’s
employees, including the company’s CEO, are New York State residents, and some of them, including
the CEO, reside within the MCTD. Petitioner currently withholds New York State income tax for its
employees who are New York residents. According to Petitioner’s Operations Manager, “typically
none of our NY employees [i.e., the New York State residents] work from home.”
Analysis
Tax Law § 801 imposes a tax on “the payroll expense of every employer who engages in
business within the [MCTD].” Tax Law § 801 (a). The MCTD includes all the counties of New York
City as well as the counties of Dutchess, Nassau, Orange, Putnam, Rockland, Suffolk and Westchester.
See Public Authorities Law § 1262. Employers engaged in business within this area are subject to the
MCTMT based on the payroll expense for all of their “covered employee[s],” defined as employees
who are “employed within the MCTD.” Tax Law § 800 (d). Therefore, to determine whether
Petitioner is subject to the MCTMT, we must establish whether it is an employer for purposes of the
statute, and then determine whether it is engaged in business within the MCTD.
For purposes of the MCTMT, with certain exceptions not applicable here, a taxpayer is an
employer if it is subject to withholding tax under Tax Law § 671 and has a payroll expense in excess of
$312,500 in any calendar quarter. See Tax Law § 800 (b). Employers subject to the tax are responsible
for remitting MCTMT on a quarterly basis. See Tax Law § 804 (a). Petitioner stated that it withholds
taxes from its employees. Therefore, for purposes of this opinion, we assume without deciding that
Petitioner is an employer for purposes of the MCTMT.
Article 23 of the Tax Law, which imposes the MCTMT, does not specify what it means to be
“engaged in business” in the MCTD. However, § 806 of the Tax Law extends the provisions of the
personal income tax in Article 22 of the Tax Law to the administration of the MCTMT. The personal
income tax is imposed on nonresidents on their New York source income attributable to a business,

-2-

TSB-A-13(2) MCTMT
Metropolitan Commuter
Transportation Mobility Tax
October 17, 2013

trade, profession, or occupation carried on in this State. The personal income tax “carried on” standard
is analogous to the MCTMT “engaged in business” standard. The personal income tax regulations
provide that:
A business, trade, profession, or occupation is carried on within New York State by a
nonresident when such nonresident occupies, has, maintains or operates desk space, an
office, a shop, a store, a warehouse, a factory, an agency or other place where such
nonresident’s affairs are systematically and regularly carried on, notwithstanding the
occasional consummation of isolated transactions without New York State. This
definition is not exclusive. Business is carried on within New York State if activities
within New York State in connection with the business are conducted in New York
State with a fair measure of permanency and continuity… 20 NYCRR, § 132.4(a)(2)
Applying the concepts in these regulations, we conclude that Petitioner is not engaged in
business in the MCTD. Petitioner’s facts indicate that it is not engaged in continuous, frequent or
regular activities in New York State. Petitioner is located in Connecticut and it maintains no place of
business within New York. While an employee’s residence may be considered an “office” if it is used
in the regular course of the corporation’s business, Petitioner maintains that its employees typically do
not work from home. The employees’ base of operations and the place from which Petitioner directs
and controls its employees is Petitioner’s location in Connecticut. Although some of Petitioner’s
officers and employees reside in New York State and, therefore, their wages are taxable in New York
State, their services are performed in Connecticut. Finally, the actual seat of management of the
corporation is at its Stamford, Connecticut location.
Based on the facts presented, Petitioner is not engaged in business in the MCTD, and therefore,
is not subject to the MCTMT.

DATED: October 17, 2013

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. The information provided in this document does not cover every situation
and is not intended to replace the law or change its meaning.