telecommuter tax - ask international non-resident

Richard Pitt was a partner in, the FIRST commercial ISP in Canada
that I have been able to confirm.
Richard was and is also the Keeper of the CEN-TA Group Computer systems
since about Sept 1985 and has therefore kept my stuff alive for more than 20
years.  It is hard to believe but we were actually networked over dial - up
telephone lines using Radio Shack 600 baud modems since 1983 in Toronto,
Ottawa and Vancouver and I did this originally using TANDY Model 16
Computers running Microsoft XENIX at the suggestion of One Bill Gates who
told me at the time that his XENIX (a UNIX look alike) was the way to go.
When Gates abandoned XENIX in 1986 and sold it to SCO, Richard carried us
through SCO XENIX to SCO UNIX to SCO Open Desktop and now to Lynix Servers
with Windows boxes as terminals.  And, in fact, I am still using a 1981
Database (now FILEPRO 16) database which started out as TANDY's PROFILE
running on a 64K Tandy Model II and had 32 fields to put information into.
What I am saying is that Richard has always been at the leading edge of
small or big office computing and in 1985 administered computers, upgraded
computers, changed software, etc for a myriad of clients from Port Alberni
to Ottawa.
His email today was prompted by the Supreme Court of the USA's turning down
an unusual appeal which although a little scary, is actually also a positive
for many of my clients.  Basically, the case involved a Nashville Man who
worked for a New York company.  He spent 25% of his time physically in New
York and the rest of his time telecommuting from his home in Nashville.
When preparing his US tax returns, he only paid NY state tax on the 25%.
However, New York State has a law which allows the New York State to tax
telecommuters who are telecommuting for their OWN Personal convenience. It
does NOT apply if the telecommuting is for the employer's convenience.
I guess that this means that a Tennessee Employee would NOT be taxable by
New York State if they were in Tennessee when hired and worked from
Tennessee because the New York employer needed them and hired them as an
absentee person because that was the only way to get them as opposed to
hiring someone who they would prefer worked in the company's office but who
works sometimes in the office and the rest of the time telecommuted from
where-ever.  I know - it is a difficult fine line but I think I get it. In
this particular case, Tennessee is an almost tax free state (tax on interest
or rent or dividends but NOT on wages) and the plaintiff is clearly having
to pay more tax.  If the plaintiff lived in New Jersey or Minnesota or
Oregon, it would not make a lot of difference in his or her tax bill because
the earnings would be taxable for state tax anyway and we would only be
worrying about a difference in the tax rate as opposed to tax or NO tax.
Anyway, read on. The following is the CNET News story and then you can see
Richard's comment which prompted me to find the original story.
What I like about it is that it clearly makes a good point for about thirty
of my clients who are in the US on a TD or H$ visa with their spouse and who
are telecommuting back to a Canadian employer.  My point has long been that
this is a legal venture because they are working in Canada and certainly NOT
taking a job away from an American.
Telecommuters: Beware the tax man
By Elinor Mills
Staff Writer, CNET
Published: November 2, 2005, 4:00 AM PST
TalkBack E-mail Print TrackBack \r
Telecommuters employed by a company outside their home state may be at risk
of having to pay extra taxes unless Congress adopts a bill protecting them,
experts said Tuesday.
The U.S. Supreme Court on Monday refused to hear the appeal of a Tennessee
computer programmer who claimed that New York was violating his
constitutional rights by forcing him to pay taxes on income he earned in his
home state while telecommuting.
The New York tax provision, called "Convenience of the Employer," allows the
state to tax non-residents who choose to telecommute for their New
York-based employers for their convenience, but not if it is at the
convenience of the employer. The Supreme Court let stand the New York
appeals court ruling in favor of the state.
What's new:
The U.S. Supreme Court refused to hear the appeal of a Tennessee computer
programmer who claimed that New York was violating his constitutional rights
by forcing him to pay taxes on income he earned in his home state while
Bottom line:
 Telecommuters employed by a company outside their home state may be at risk
of having to pay extra taxes unless Congress adopts a bill protecting them.
More stories on telecommuting
"That means that at the end of the day telecommuters will be subject to more
taxes rather than less taxes," said Scott Clark, who runs the state tax
practice for Thelen Reid & Priest in New York.
The technology industry, more than most others, relies heavily on
telecommuters who can just as easily fire off e-mails and work on documents
or program code in their slippers at home as they can sitting in their
cubicle at the office.
Telecommuter advocates were quick to blast the decision.
"It's particularly egregious in light of the fact that telecommuters greatly
benefit society in many ways, not the least of which is by consuming fewer
of our scarce resources--like petroleum, roadways, and bus or train seats,"
the American Telecommuting Association said in a statement. "Even with this
ruling, however, the ranks of telecommuters will continue to grow because
the benefits so far outweigh the costs."
About 45 million people work from home, and the number of employee
telecommuters rose 30 percent during the past year, according to ITAC, the
Telework Advisory Group for WorldatWork, in research commissioned from The
Dieringer Research Group.
"Statutes like that in New York make it very burdensome for individuals who
are in a technology-related or e-commerce field to do business," Clark said.
In the Supreme Court case, Tennessee resident Thomas Huckaby told the court
he was not opposed to paying tax on the 25 percent of his income that he
earned while working in the New York office. However, he objected to being
ordered to pay tax on the 75 percent of his income he earned working at his
Nashville home. Tennessee does not have income tax.
The ruling "makes it a lot harder for a New York employer to hire an
out-of-state telecommuter because they are submitting themselves to New York
tax, which is a very high tax," said Peter Faber, Huckaby's attorney. "My
concern is that other states may be emboldened by this to adopt a similar
Faber said the New York state tax department's advisory committee, on which
he sits, is studying the taxation of telecommuters. "Even though they won in
court, they may well relax their position on telecommuters," he said.
An "antiquated" provision?
"The provision is rather antiquated," dating to the 1960s, Clark said.
"Quite frankly, it is about time states brought these provisions into the
current-day world and recognized the fact that telecommuting is essential to
our economy and that it is an everyday fact."
Pennsylvania, Nebraska and New Jersey have similar laws, Faber said.
However, New York is more aggressive at enforcement than other states, said
Nicole Belson Goluboff, who serves on the advisory board of the Telework
Coalition, a telecommuter advocacy group. "Any state may decide that it
wants to adopt a similar rule," she said.
"If all of the states go to a convenience-of-the-employer methodology, this
is going to cause confusion for people who are telecommuting in one state
and maybe never step foot in their employer's home state," said Stephanie
Lipinski Galland, who works on the American Bar Association tax section's
committee on state and local taxes.
The court's action runs counter to federal efforts to encourage people to
drive less and telecommute more, Goluboff said.
Previous Next The decision "comes at a particularly important time because
interest in telecommuting is significantly heightened because of high gas
prices, the threat of short fuel supplies and also the potential threat of
an avian flu pandemic," she said.
The Telecommuter Tax Fairness Act, reintroduced in the Senate in May, would
protect telecommuters from double taxation. The bill is in committee and not
yet scheduled for a vote, said a spokeswoman for Sen. Christopher Dodd, a
Democrat from Connecticut.
"Congress can resolve this tomorrow. Congress has the power; there's no
question," said Walter Hellerstein, a law professor at University of Georgia
and author of books on state taxation.
Hellerstein said he could understand why the Supreme Court didn't want to
consider the matter. "Where does a telecommuter earn his income? That's a
pretty hard question" to answer, he said.
-----Original Message-----
From: Richard Pitt [mailto:richard at]
Sent: Wednesday, November 02, 2005 5:38 PM
To: David Ingram
Subject: telecommuter tax
Oh great!
And I'll bet that if I telecommute from Canada the INS will come visit
me too :(
What kind of visa do I need to work on a US computer from Canada
(actually a serious question as I will shortly be doing just that)
In fact I already do - not that I'm getting paid for it, but I have root
privileges on a system in the US now and soon will have for 2 more
customers. Solara with a system in Spokane, and Galaxy with systems in
Richard C. Pitt                 Pacific Data Capture
richard at              604-644-9265
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