I'm a touring musician who performs a few shows a year in New York City, and my business manager and accountant happen to be based there too. Does that subject all my self-employment earnings to New York's MCTMT?

Plain-English summary

A nonresident touring musician who performs and records albums, and who plays several shows a year within the MCTD, asked whether he owes MCTMT because of those performances and because his business manager and accountant — who each have other clients besides him — happen to be based within the MCTD, even though he keeps no office of his own there.

MCTMT's self-employment provision (Tax Law § 801(a)(2)) taxes an individual's net self-employment earnings attributable to the MCTD once those earnings exceed $50,000 for the year, using the federal definition of "net earnings from self-employment" under IRC § 1402(a) (gross income from a trade or business, incorporating IRC § 162's definition of "trade" and "business").

The Department split the question in two:

1. Business manager and accountant in the MCTD — because they serve the musician on a non-exclusive, professional basis (they have other clients and aren't his employees or agents engaged in his business), their presence in the MCTD does not, by itself, subject any of his net self-employment earnings to MCTMT.
2. Performances in the MCTD — a musician's trade or business is performing, so he is engaged in that trade or business in the MCTD every time he performs there. His net earnings specifically derived from those in-MCTD performances are subject to MCTMT (once the $50,000 threshold is met for the year), while earnings from performances elsewhere are not.

What this means for you

Touring musicians and performing artists

You don't create MCTMT exposure just by hiring a manager, accountant, agent, or attorney who happens to be located in the MCTD, as long as that person serves you on a non-exclusive professional basis rather than as your employee or business agent. What actually triggers the tax is performing (i.e., doing your trade or business) physically within the district.

Self-employed individuals with New York-based professional advisors

The location of your outside professional advisors — accountant, lawyer, consultant — generally doesn't itself establish MCTMT nexus. Focus instead on where you personally carry out your trade or business.

Touring companies and booking agents allocating performer income

Track earnings by performance location. Only the portion of a self-employed performer's net earnings tied to MCTD shows counts toward the $50,000 threshold and resulting MCTMT liability — earnings from out-of-district shows are excluded from that calculation.

Common questions

Q: Does having an accountant or manager based in the MCTD create MCTMT liability by itself?
A: No, as long as they serve you on a non-exclusive basis (have other clients) and aren't functioning as your business agent or employee.

Q: What earnings actually count toward MCTMT for a touring performer?
A: Net self-employment earnings specifically derived from performances (or other trade/business activity) conducted within the MCTD -- once total MCTD-attributable earnings for the year exceed $50,000.

Q: Do earnings from shows outside the MCTD count toward the $50,000 threshold?
A: No -- the threshold and the tax apply only to earnings attributable to activity within the MCTD.

Q: Can I rely on this ruling for my own touring or self-employment situation?
A: No. This advisory opinion binds the Department only as to the petitioner and the specific facts described.

Citations and references

Statutes:

• Tax Law § 800(e) ("net earnings from self-employment," referencing the Internal Revenue Code)
• Tax Law § 801(a)(2) (MCTMT on self-employment earnings attributable to the MCTD exceeding $50,000/year)
• IRC § 1402(a) (net earnings from self-employment: gross income from a trade or business)
• IRC § 162 (definition of "trade" and "business," incorporated by reference via IRC § 1402(c))

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/a14_1mctmt.pdf

Original ruling text

New York State Department of Taxation and Finance

Office of Counsel
Advisory Opinion Unit

TSB-A-14(1)MCTMT
Metropolitan Commuter
Transportation Mobility Tax
July 2, 2014

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. M110728B

The Department of Taxation and Finance received a Petition for Advisory Opinion from
REDACTED REDACTED REDACTED REDACTED REDACTED. Petitioner asks whether
his occasional performances in the Metropolitan Commuter Transportation District (MCTD) and
the presence of his business manager and accountant in the MCTD subject Petitioner to the
Metropolitan Commuter Transportation Mobility Tax (MCTMT).
We conclude that the presence of Petitioner’s business manager and accountant in the
MCTD does not render any of Petitioner’s net earnings from self-employment subject to
MCTMT. However, Petitioner is subject to the MCTMT on the net earnings he derives from
performances in the MCTD.
Facts
The Petitioner is a non-resident musician who has been touring and making albums for
many years. He currently performs several times a year in the MCTD. Petitioner does not
maintain his own office within the MCTD. However, Petitioner’s accountant and business
manager are located within the MCTD. The accountant and business manager both have other
clients in addition to Petitioner, and neither is an employee of the Petitioner.
Analysis
Tax Law § 801 (a)(2) imposes a tax on earnings from self-employment on individuals
who have earnings attributable to the MCTD if those earnings for the taxable year exceed
$50,000. Net earnings from self-employment means an individual’s net earnings from selfemployment as defined under the Internal Revenue Code (IRC). See IRC § 1402 (a); also see
Tax Law § 800 (e). Net earnings from self-employment, for purposes of IRC § 1402 (a), means
gross income derived by any individual from a trade or business carried on by such individual.
See IRC § 1402 (a). The terms “trade” and “business” as used in IRC § 1402 (a) have the same
meaning as used in IRC § 162. See IRC §1402 (c).
Petitioner’s business manager and accountant provide professional services to Petitioner
on a non-exclusive basis. The manager and accountant are not, for the purposes of the MCTMT,
agents of Petitioner engaged in Petitioner’s business. Therefore, their performance of services
for Petitioner in the MCTD does not subject Petitioner to the MCTMT.

-2-

TSB-A-14(1)MCTMT
Metropolitan Commuter
Transportation Mobility Tax
July 2, 2014

Petitioner, a professional musician, engages in his trade or business in the MCTD when
he performs in the MCTD. Accordingly, he will be liable for MCTMT on all his net earnings
derived from his performances in the MCTD, assuming those earnings exceed $50,000 for the
taxable year.

DATED: July 2, 2014

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.