Several years ago, the Amtrak Reauthorization Act solved a long standing tax problem for rail employees who perform service in more than one state. As per that law, rail employees who cross state lines in the performance of their duties only have a tax liability to their State of residence. That tax determination is made on a daily basis. Over the past few years some issues old and new have arisen that we once again must address and are explained below.
                                             
 

New Issue  - Computer and Input Problem

1.  So as to remain in conformity with the law, Metro North coded assignments that regularly cross State lines as "Amtrak" assignments for State Tax withholding purposes. Members working those assignments should only be taxed in their State of residence. Unfortunately, as of late, the Metro North Crew Management System has applied New York State taxes to some Connecticut residents whose assignments worked in both states. It is strongly suggested that our members on assignments that cross State lines, check their paystub on a weekly basis to ensure that they have only been taxed in their State of residence. In the event you find that you have had tax withheld in error, please contact John Meyers at extension 2654. We have identified many of the errors already and they have been corrected, however, it is important to continue to check your pay stubs.

New Issue - W-2 State Income Reporting

2.  In addition, several members have questioned the manner by which Metro North reported 2004 & 2005 earnings to New York State. The New York State Department of Taxation and Finance issued a notice requiring all employers to reflect all wages earned to New York when an employee earns only a small part of their income in New York State.  As an example, a resident of Connecticut who earned $60,000.00 in CT and $20,000.00 in New York would under this requirement receive a W2 reflecting $80,000.00 in NY wages. When filing a non-resident income tax form, that CT resident would need to allocate the $60,000.00 in wages to Connecticut on NY State Tax Form IT-2104.1 (Allocation of Withholding Tax) thereby alleviating a New York tax liability on that $60,000.00 in wages which were actually earned in Connecticut. This is now New York Tax Law and has been since 2002.

Please check with your tax advisor for further information. Attached is the New York State Department of Taxation notice on this issue.

 

  
Old Issue - Taxation on flag assignments

Another issue that raised its ugly head again concerns the flagperson who deadheaded from a terminal in Connecticut (Stamford, New Haven, Danbury, etc.) and performs flag work at a New York location (DH from Stamford to New Rochelle to flag). New York is requiring all employers (in a written tax opinion) that when this occurs all the income for that day must be reported to New York. They are arguing the flag work does not cross state lines and therefore New York should receive the tax on the income.

We are in the process of appealing this decision with the New York Commissioner of Taxation. Until this decision is reversed by New York State, Metro North will continue to withhold tax on anyone who works under this scenario. We will also be notifying the State of Connecticut of New York's decision in the hopes they will join us in having the issue reversed.