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N.Y Appeals Court Rules Out-of-State Telecommuter Must Pay N.Y. Income Tax
In a recent decision that may have wide ranging implications for the growing number of people who work by telecommuting from home, the N.Y. Appeals Court ruled that a Nashville man who works remotely via PC for a New York based union must pay New York tax for his entire salary. Thomas Huckaby, a Tennessee computer programmer, during the two years in question worked 75% of the time from his home and would travel to New York to work only about a quarter of the time. He initially paid New York State income tax on just 25% of his earnings. However, relying on a New York law that states that a worker's income is taxable if he or she chooses to live outside the state, as opposed to if she/he is transferred to another location, the NY Appeals Court decided that New York has the right to tax 100% of a non-resident employee's income derived from New York sources. Most states have resolved the issue by apportioning income. In 2004, the Telecommuter Tax Fairness Act of 2004 was introduced by Connecticut senators Christopher Dodd and Christopher Shays that would abolish the current double taxation on income that results from New York's "Convenience Rule." Moreover, the Huckaby decision appears to be at odds with the N.Y. Appeals Court's decision In the Matter of Maxine Allen v. Commissioner of Labor, where the Court held that physical, not virtual presence governs eligibility for unemployment insurance benefits.
In that case the Appellant, Maxine E. Allen argued that during the period in question she worked from home via electronic access to Reuters' mainframe computer located at their head office in New York. Following termination of her employment, Allen filed a claim for unemployment benefits, which was subsequently denied on the basis that she was not eligible since all of her work was performed in Florida. In holding that physical presence determines eligibility for unemployment benefits, the Court rejected the Appellant's claim that, for the purposes of such benefits physical presence was not required because her entire services were realized and consequently localized at Reuters' mainframe in New York.
For a copy of the Huckaby case, visit:
http://shorl.com/fesifedruvefre
For previous LOC summaries dealing with NY telecommuter issues, visit:
http://www.heydary.com/internet-laws/20030710.html
http://www.heydary.com/internet-laws/20040923.html
For a copy of the Maxine Allen case, visit: