Court rules telecommuter must pay taxes in New York

Made up question:
I am living in Nashville and telecommuting for a New York State
employer.  Do I have to pay New York State Taxes?
david ingram replies:
This is scary but the answer for New York at the moment is "YES"! Read
on.  This was sent to me by Richard Pitt who was a partner in, the first commercial ISP in Canada.
Court rules telecommuter must pay taxes
By Michael Gormley, Associated Press Writer  |  March 29, 2005
ALBANY, N.Y. -- A telecommuter who lives out of state while working by
computer for a New York employer must pay New York tax on his full
income, the state's highest court ruled Tuesday in a case that could
have wide implications in the growing practice.
The Court of Appeals said that computer programmer Thomas Huckaby who
lives in Nashville, Tennessee., owed New York income tax for his full
salary, not just the time he spent working at his employer's New York
Huckaby paid tax on about 25 percent of his income over two years for
the time he spent working in New York state. But the court upheld a
state tax department ruling that all his income should be taxed. That
amounts to $4,387 plus interest. However, the ruling could lead to
much greater income for the state as it is applied to the growing
field of telecommuting.
The U.S. Census Bureau's latest statistics show that nearly 4.2
million people worked at home in 2000, up from 3.4 million in 1990.
The bureau also reported that the International Telework Association
and Council found that 8.8 million people telecommuted daily in 2003,
and 12.4 million in 2004 -- a nearly 200 percent increase over the
2000 Census figure.
"The way the work force is evolving and that companies are evolving,
you are going to see more people working for companies from different
states even across the country," said Bob Smith of the International
Telework Association and Council based in Silver Spring, MD.
Smith said the issue of which state gets their income tax is a growing
"It can be a damper on telework," said Smith. "What's important in our
country overall is to make sure laws keep up with technology
developments and the needs of both the employee and the employer,
because there are benefits for both."
In February, President Bush proposed several new tax changes,
including one to encourage telecommuting.
"New York provides the job, New York provides the professional
opportunity, and New York should be able to tax that income, even if
the employee for his own convenience was working outside of New York
state," said Marc Violette, spokesman for state Assistant Solicitor
General Julie Mereson, who won the case.
The issue split the court, and the majority acknowledged the decision
could discourage telecommuting.
"New York has the right to tax 100 percent of a non-resident
employee's income derived from New York sources," according to the 4-3
decision by Court of Appeals. The court relied on a fairness rule
called the "convenience of the employer" under law that says a
worker's income is taxable if he chooses to live outside the state, as
opposed to if he or she was transferred there.
In a strong dissent, Judge Robert Smith argued that the basis of the
majority's decision that all income is taxable is "that the
commissioner says it is ... The majority cites no authority at all,
and offers no persuasive reason, in support of this new
"To say a person's taxability depends on where his employer is wrong,"
said Huckaby's attorney, Peter Faber of New York City. "I think this
is an issue of national significance."
No virus found in this outgoing message.
Checked by AVG Anti-Virus.
Version: 7.0.308 / Virus Database: 266.8.6 - Release Date: 3/30/05
-------------- next part --------------
An HTML attachment was scrubbed...


Trackback URL for this entry:

No trackback comments for this entry.