Case Information

*1 The Attorney General of Texas Iecember 30, 1985

JIM MATTOX

Attorney General Honorable Lloyd Cr,iss Opinion No. JM-411

Supreme Court Building chairmen P. 0. BOX 12548 Committee on Labor, and Re: Whether a neighboring state is Aus!in. TX. 78711. 2548 5121475.2501 Employment Rela.tions prohibited from withholding state Telex 9101874.13S7 Texas House of Representatives income tax payments from the salary Telecopier 5121475.0266 P. 0. Box 2910 of an employee who is a permanent

Austin, Texas 7f769 resident of Texas but who works partially or temporarily in the 714 Jackson, Suite 700 Dallas, TX. 75202.4506 neighboring state 214l742.8944 Dear Representatiw Criss:

4824 Alberta Ave., Suite 160 You have submitted the following request regarding the El Paso, TX. 79905.2793 915/533-3464 withholding of state income tax from,the pay of certain railroad

employees who are Texas residents: 1001 Texas. Suite 700 Individuals living in Texas and working for Houston, TX. 77002~3111 railroad,8 are often required to travel through 713/2235&W several states in the course of their daily employmsnt. Some of these states, notably the 906 Broadway, Suite 312 neighboring states of Oklahoma and New Mexico, Lubbock, TX. 79401.3479 require the railroad to withhold state income 8061747.5238 taxes from the pay of these workers, despite the

fact t'iat these individuals maintain their 43G3 N. Tenth, Suite S permaner,t residence in Texas. McAllen, TX. 78501-1685 512M2.4547 This practice seems to be inherently unfair. I

would s,ppreciate your offering an opinion on whether any laws of this state or of the United 200 Main Plaza, Suite 400 San Antonio, TX. 78205.2797 States prevent this practice of withholding state 512m54191 income tax from the pay of an employee whose

permanert residence is sot in that state, but who is mere1.y working for some period of time in the An Equal Opportunity/ state ir. the course of his/her employment. Affirmative Action EmplOYer

We are compelled to conclude that the railroad carriers in question are required to wl.thhold such taxes from the pay of certain workers.

49 U.S.C., sc.ction 11504, provides, in part, as follows: *2 Honorable Lloyd Criss - Pa(:e 2 (JM-411)

(a)(l) In this subsection, an employee is deemed to have earned nor+ than 50 percent of pay in a State or subdivilij.on of a State if the employee --

(A) performs regularly assigned duties on a. locomotive, CIU: or other track-borne vehicle in at least 2 St:ates and the mileage traveled in one State or subdivision of that State is more than 50 percent of the total mileage traveled by the employee while employed during the calendar year;

. . . . (2) A rail, express, or sleeping car carrier providing transportation subject the jurisdiction of the Interstate Commerce C~ission under subchapter I of chapter 105 of this title [49 USCS 1510501 et seq.] shall withhold from the pay of an employee referred to in paragraph (1) of this subsection <only income tax required to be withheld by the laws of a State, or subdivision of that State -

(A) in which th e employee earns more than 50 percent of the pay received by the employee from the carrLer; or

(B) that is the residence of the employee (as shown on thme employment records of the carrier), if t:he employee did not earn in one State or sub3:Lvision more than 50 percent of the pay reorived by the employee from the carrier during the preceding calendar year.

Thus. federal law ex~~licitly establishes the standard upon which the requirements of withholding state taxes by rail carriers are based. So long as thg! railroads comply with the legislative determination regarding w'v~re "an employee is deemed to have earned more than 50 percent of p,yr," it is apparent that the withholding by the railroad of state income taxes is authorized by the state in which an employee is deemed to have earned withholding.

SUMMARY Rail carrier:! are required to withhold income

taxes from the pay of an employee whose residence is Texas if scch employee is correctly deemed *3 Honorable Lloyd Criss - Page 3 (JM-411)

under federal law to have earned more than 50 percent of pay in a state which imposes such taxes.

JIM MATTOX Attorney General of Texas JACXHIGRTOWBR

First Assistant Attorney Gmeral

MARY KELLER

Executive Assistant Attornsy General

ROBERT GRAY

Special Assistant lfttorney (General

RICK GILPIN

Chairman, Opinion Committee

Prepared by Colin Carl

Assistant Attorney General