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U.S. Federal Bill Would Prohibit Double State Taxation of Telecommuter Income
The Telecommuter Tax Fairness Act of 2004 (S. 2785) was introduced on September 9, 2004, by the Connecticut Senators, Christopher Dodd (D-Conn.) and Joseph Lieberman (D-Conn.), and referred to the Senate Finance Committee. This Bill would prohibit double taxation of salaried workers who work part-time from their residence located in a different state from where their employers are domiciled. This Bill would abolish the current double taxation on income that results from New York's "Convenience Rule." The Convenience Rule treats as New York source income the wages earned by non-resident employees if the employer is domiciled in New York, the employee is directed from New York, and the work could be performed in New York notwithstanding where the work is actually done. Because Connecticut, like most states, treats wage income earned while resident in Connecticut as Connecticut source income and does not allow a credit for foreign taxes imposed on that income, double taxation results.
Senator Dodd states:
"Technology has changed the way business is conducted in America. With the use of cell phone, laptop computers, Email, the Internet, mobile networking, and many other telecommunication advancements of the 21st century, Americans have a greater flexibility in where they can work without compromising productivity. Many citizens now choose to work from home or alternative offices when their physical presence is not necessary at their primary place of work."
The Bill if enacted would overrule a recent decision of the New York Court of Appeal that upheld New York's Convenience Rule. Zelinsky vs. Tax Appeal Tribunal of the State of New York, 1 N.Y. 3d 85, 801 N.E. 2d 840 (November 23rd, 2003), petition for Certiorari denied US, 124 S.Ct. 2068, 158 L.Ed. 2d 619 April 26, 2004.
For a copy of the Bill, visit:
http://www.theorator.com/bills108/s2785.html