Teleworkers Slam 'Revision' To New York Tax Code

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

20 June 2006

A group representing the interests of the growing ranks of America's teleworkers has denounced a revision in New York state's tax law as as “misleading” and “useless”.

Under New York's tax rules, non-residents who telecommute some or most of the time for their New York employers may be forced to pay New York taxes, not only on the income they earn when they work in New York, but also on the income they earn when they work at home, in a different state - often leading to double taxation of the income by New York and their home state.

Unlike many of its neighbours, New York applies the 'convenience of the employer' test when deciding how to tax telecommuters, rather than basing its assessment on the residence status of the worker in question. This was a policy upheld by the Court of Appeals in March, 2005, in the case of a computer programmer who lived and worked in Tennessee, and spent just 25% of his working days during the period in question physically present in New York, but who state tax authorities believed was liable to pay tax there on 100% of the income that he earned.

On May 15, 2006, New York announced that it had revised its telework tax policy. However, according to the Telework Coalition (TelCoa), a telework advocacy group headquartered in Washington, DC, while the wording of the revised policy is new, the policy itself is essentially the same, retaining a clause requiring teleworkers to prove that the work they are doing at home is an employer "necessity" that can't be performed in a New York office.

TelCoa, and another pressure group, the Association for Commuter Transportation (ACT), are urging Congress to take up a bill called The Telecommuter Tax Fairness Act, which has been introduced by U.S. Senator Chris Dodd (D-CT) and U.S. House Representative Christopher Shays (R-CT). This piece of legislation aims to eliminate the dual taxation of income in the case of teleworkers.

“New York’s attempt to create the appearance that it has become more lenient when, in fact, most nonresidents will still be penalized for telecommuting across state lines only heightens the need for The Telecommuter Tax Fairness Act,” stated Nicole Belson Goluboff, a lawyer and TelCoa Advisory Board member.

“With telework playing such an important role in the nation’s pandemic planning – and with gas prices as high as they are – it is outrageous for New York to continue punishing people who telecommute,” added Chuck Wilsker, TelCoa’s President and CEO.

“Since New York won’t get rid of the tax on interstate telework, Congress has to do it," he concluded.

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