Supreme Court Refuses To Hear Telecommuter's New York Tax Challenge

by Leroy Baker, Tax-News.com, New York

02 November 2005

The US Supreme Court on Monday refused to hear an appeal challenging a controversial New York tax policy which obliges out-of-state telecommuters employed by New York firms to pay state taxes on their full salaries.

The case was originally brought by Thomas Huckerby, a computer programmer from Nashville, Tennessee, who had been ordered by the New York tax authorities to pay tax on 100% of his salary, despite the fact that he spent just 25% of his time physically present at the New York office of the union for which he worked.

Lawyers acting for the state argued that New York was entitled to tax Mr Huckerby's full salary because he had chosen to live and work in Tennessee "solely for his own convenience".

Unlike many of its neighbours, New York applies the 'convenience of the employer' test when deciding how to tax telecommuters, rather than basing their assessment on the residence status of the worker in question.

Mr Huckerby's attorney, Peter Faber countered by arguing that determining the taxation of telecommuters on the basis of whether their status is necessary, or merely convenient, for their employer violates the equal protection and due process clauses of the US Constitution.

According to Mr Faber, more than 40 million Americans perform some of their work duties from home.

"This case brings to the fore the plight of every telecommuter who works in one state for an employer located in another," he told justices in a filing.

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