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Metropolitan commuter transportation mobility tax (MCTMT): Covered employee

The guidance on this page applies to tax quarters beginning on or after 7/1/23. 

For guidance on the return due 7/31/23, for the quarter ending 6/30/23, see Publication 420, Guide to the Metropolitan Commuter Transportation Mobility Tax

When determining if an employer must file the MCTMT quarterly return, the Metropolitan Commuter Transportation District (MCTD) includes both Zone 1 and Zone 2 counties.

When determining the payroll expense attributable to Zone 1 and Zone 2, replace references to the MCTD with Zone 1 and Zone 2, respectively.

Covered employee

A covered employee means an employee (including a statutory employee) whose services are allocated to the MCTD.

Apply the following tests in the order presented below to determine if the employee's services are allocated to the MCTD. If any test results in the allocation of the employee's services to the MCTD, the employee is a covered employee. You do not need to apply another test. Otherwise, proceed to the next test.

1. Localization

An employee's services are allocated to the MCTD if the employee performs them either:

  • entirely within the MCTD; or
  • both inside and outside of the MCTD, but the services performed outside the MCTD are incidental to the employee's services performed in the MCTD (for example, the services are temporary or transitory in nature, or consist of isolated transactions).

2. Base of operations

An employee's services are allocated to the MCTD if the employee's base of operations is in the MCTD. (This test cannot be applied if the employee has either more than one base or no base of operations.)

Base of operations means the place where the employee customarily starts out to perform their functions in or out of the MCTD. It is not the place where the employee is continuously located. It's where the employee customarily returns to:

  • receive instructions from their employer
  • receive communications from other persons
  • replenish stock and materials
  • repair equipment used
  • perform any other function necessary in the exercise of their trade or profession.

3. Place of direction and control

Allocate all services to the MCTD if an employee's direction and control emanates from only the MCTD and the employee performs some services within the MCTD.

Direction and control means the place from which the employer directs and controls the activities of the employee. It is not necessarily the location of the principal office, but rather the point from which basic authority over the supervision of services emanates (for example, the place from which job assignments are made, or instructions issued, or both, or the place at which personnel and payroll records are maintained).

4. Residence

If none of the above tests result in a clear allocation of services, all of the employee's services are allocated to the MCTD if the employee resides there and performs some services in the MCTD. 

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