PRIA, Government Policy, Made Personal

Summary

Motor and motor private carriers covered by subchapter I of chapter 135 must only have state income tax taken out for the state (or part of the state) where the employee lives when that employee regularly works in two or more states. Employee is defined in section 31132. If an employee spends more than 50 percent of their work time in one state in a year, they are treated as having earned more than 50 percent of their pay there. Water carriers covered by subchapter II of chapter 135 must send tax forms and reports only to the employee’s state of residence and to any state where the employee earned more than 50 percent of pay during the preceding calendar year. That water-carrier rule also applies to masters, officers, and sailors on vessels in foreign, coastwise, intercoastal, noncontiguous trade, or U.S. fisheries. Motor carriers who withhold under the first rule must file tax reports only with the employee’s state of residence.

Title 49, §14503

Transportation, Source: USLM XML via OLRC

(a)Single State Tax Withholding.—

(1)In general.—

No part of the compensation paid by a motor carrier providing transportation subject to jurisdiction under subchapter I of chapter 135 or by a motor private carrier to an employee who performs regularly assigned duties in 2 or more States as such an employee with respect to a motor vehicle shall be subject to the income tax laws of any State or subdivision of that State, other than the State or subdivision thereof of the employee’s residence.

(2)Employee defined.—

In this subsection, the term “employee” has the meaning given such term in section 31132.

(b)Special Rules.—

(1)Calculation of earnings.—

In this subsection, an employee is deemed to have earned more than 50 percent of pay in a State or subdivision of that State in which the time worked by the employee in the State or subdivision is more than 50 percent of the total time worked by the employee while employed during the calendar year.

(2)Water carriers.—

A water carrier providing transportation subject to jurisdiction under subchapter II of chapter 135 shall file income tax information returns and other reports only with—

(A)the State and subdivision of residence of the employee (as shown on the employment records of the carrier); and

(B)the State and subdivision in which the employee earned more than 50 percent of the pay received by the employee from the carrier during the preceding calendar year.

(3)Applicability to sailors.—

This subsection applies to pay of a master, officer, or sailor who is a member of the crew on a vessel engaged in foreign, coastwise, intercoastal, or noncontiguous trade or in the fisheries of the United States.

(c)Filing of Information.—

A motor and motor private carrier withholding pay from an employee under subsection (a) of this section shall file income tax information returns and other reports only with the State and subdivision of residence of the employee.

Notes & Related Subsidiaries

Editorial Notes

Prior Provisions

Provisions similar to those in this section were contained in section 11504 of this title prior to the general amendment of this subtitle by Pub. L. 104–88, § 102(a).

Statutory Notes and Related Subsidiaries

Effective Date

Section effective Jan. 1, 1996, except as otherwise provided in Pub. L. 104–88, see section 2 of Pub. L. 104–88, set out as a note under section 1301 of this title.

§14503 Withholding State and Local Income Tax by Certain Carriers