Is a private ambulance company that also provides emergency medical care en route taxed as a New York transportation corporation (barred from electing S corporation status), or as an ordinary Article 9-A business corporation (eligible to elect S status)?

Plain-English summary

Metropolitan Ambulance and First Aid Corp. transports patients between homes, nursing homes, and hospitals, or between hospitals. It asked whether it's an Article 9-A general business corporation, which would let it elect S corporation status under Tax Law Section 660, or a "transportation corporation" under Sections 183-184, which would bar the S election (Section 660 only allows S status for Article 9-A taxpayers, and Section 209.4 makes Sections 183-186 taxpayers ineligible for Article 9-A in the first place).

The company argued it does more than just transport people: all its passengers need medical assistance, and its crews provide emergency medical care en route -- administering oxygen, splinting, bandaging, controlling bleeding, assisting childbirth, and performing CPR -- under New York State licensing and certification requirements. The Department applied the "principally engaged" test from Peter J. Curran Funeral Service Co. v. Graves (a corporation providing vehicles with drivers is conducting a transportation business under Sections 183-184) and concluded that Metropolitan provides TWO services -- transportation and emergency medical care -- but the medical care is rendered only "in conjunction with" and "as an ancillary to" the transportation service. Because the company is principally engaged in transportation, it's a transportation corporation under Sections 183-184, not an Article 9-A taxpayer, and therefore cannot elect S corporation status.

What this means for you

Ambulance, medical transport, and similar dual-service companies

Providing genuine, licensed emergency medical services alongside your core transport business doesn't reclassify you out of "transportation corporation" status if the medical services remain ancillary to getting the patient from point A to point B. This matters not just for the Sections 183-184 vs. Article 9-A franchise tax choice, but for anything downstream that depends on Article 9-A status, like the S corporation election.

Businesses weighing an S corporation election

Confirm your Article 9-A taxpayer status BEFORE relying on an S election -- Tax Law Section 660 only permits the election for corporations actually subject to Article 9-A. A transportation corporation under Sections 183-184 is categorically ineligible, regardless of size, ownership structure, or other S-corp eligibility factors.

Common questions

Q: Does providing medical care during transport change an ambulance company's tax classification?
A: Not on these facts -- since the medical care is rendered only as an ancillary part of the transportation service, the company remains "principally engaged" in transportation and is taxed under Sections 183-184.

Q: Can a transportation corporation elect S corporation status in New York?
A: No. Tax Law Section 660 limits the S election to Article 9-A taxpayers, and Section 209.4 excludes Sections 183-186 taxpayers (transportation and similar corporations) from Article 9-A entirely.

Q: Can another ambulance or medical transport company rely on this Opinion?
A: No. It binds the Department only as to Metropolitan Ambulance's own facts and cannot be relied upon by other taxpayers, even in an identical line of business -- see also the related freight-forwarder classification ruling TSB-A-85(19)C for a similar "principally engaged" analysis in a different fact pattern.

Citations and references

Statutes and cases:

• Tax Law § 183, § 184 (transportation corporation franchise tax)
• Tax Law § 209.4 (mutual exclusivity of §§ 183-186 and Article 9-A)
• Tax Law § 660 (S corporation election)
• Peter J. Curran Funeral Service Co. v. Graves, 257 App. Div. 888, 12 N.Y.S.2d 153 (1939)

Related rulings:

• TSB-A-85(19)C -- freight forwarder classification, same §§183-184/Article 9-A doctrine applied to a different fact pattern
• TSB-A-85(3)C -- leased tractors/trailers classification, same doctrine, decided the same day

Date note: The document header and sign-off line both read "April 29, 1985" -- no discrepancy here.

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/corporation_ao_1985.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/corporation/a85_4c.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-85 (4)C
Corporation Tax
April 29, 1985

STATE OF NEW YORK
STATE TAX COMMISSION
ADVISORY OPINION

PETITION NO.C840827A

On August 27, 1984, a Petition for Advisory Opinion was received from Metropolitan
Ambulance and First Aid Corp., 1214 East 15th Street, Brooklyn, New York 11230.
The issue raised is whether the corporation is properly taxable as a business corporation
under Article 9-A of the Tax Law and, thus, entitled to elect S Corporation status under section 660
of the Tax Law for the years ending December 31, 1982 and December 31, 1983 or, instead, is
subject to taxation as a transportation corporation under sections 183 and 184 of Article 9 of the Tax
Law and, therefore, not entitled to elect S corporation status.
Petitioner provides medical transportation services to its customers. It transports them from
their homes or from nursing homes to hospitals or from one hospital to another hospital. Petitioner
states that all of the customers transported are in need of medical assistance and that it provides not
only transportation services but also emergency medical care including administration of oxygen,
splinting and bandaging, control of bleeding, assistance in child birth and cardio-pulmonary
resuscitation while customers are in route to hospitals. Petitioner further states that New York State
regulations, licensing procedures and certification requirements govern the Petitioner in providing
its services.
Sections 183 and 184 of the Tax Law impose franchise taxes on corporations principally
engaged in a transportation or transmission business (with exceptions not here relevant).
Article 9-A of the Tax Law imposes a franchise tax on general business corporations. Section
209.4 of the Tax Law provides that a corporation subject to tax under sections 183 and 184 of the
Tax Law is not subject to tax under Article 9-A of the Tax Law.
Section 660 of the Tax Law allows an election of S corporation status only if the taxpayer
is a corporation subject to tax under Article 9-A of the Tax Law.
It has been held that a corporation principally engaged in the business of providing vehicles
with drivers is conducting a transportation business within the meaning of sections 183 and 184 of
the Tax Law. (Peter J. Curran Funeral Service Co. v. Graves, 1939, 257 App. Div 888, 12 N.Y.S.
2d 153).

RODERICK G. W. CHU, COMMISSIONER
TP-8 (3/83)

GABRIEL B. DiCERBO, DEPUTY COMMISSIONER
FRANK J. PUCCIA, DIRECTOR

-2­
TSB-A-85 (4)C
Corporation Tax
April 29, 1985

Petitioner provides two services to its customers. It provides a transportation service to
individuals in need of transportation to hospitals. It also provides emergency medical services to
some customers. However, the medical services provided are provided only in conjunction with the
transportation service and only as an ancillary to the transportation service. Accordingly, Petitioner
is principally engaged in providing a transportation service and is, therefore, subject to tax under
sections 183 and 184 of the Tax Law as a transportation corporation. Petitioner is, thus, not subject
to tax under Article 9-A of the Tax Law and may not elect S corporation status under section 660
of the Tax Law.

DATED: April 29, 1985

FRANK J. PUCCIA
Director
Technical Services Bureau

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