The Telework Coalition (TelCoa), a telework advocacy group headquartered in Washington, D.C., has denounced revisions New York State recently made to its telework tax policy as “misleading” and “useless.” Both TelCoa and another telework advocacy group, The Association for Commuter Transportation (ACT), have reaffirmed their call to Congress to protect Americans who telecommute to out-of-state employers by passing the Telecommuter Tax Fairness Act (S. 1097, H.R. 2558).
“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,” said Nicole Belson Goluboff, a lawyer and TelCoa Advisory Board member.
Under a longstanding New York tax rule, nonresidents 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 hone, in a different state. Because the telecommuters’ home states may also tax the income earned at home, these employees may be double taxed on that income.
A telecommuter might be able to avoid the double tax threat if they could prove that their telework arrangement is an employer “necessity”. However, under New York’s old telework tax policy, proving necessity was virtually impossible: A telecommuter would have to show that the nature of his work was such that it could not possibly be performed at the employer’s New York site. Because most work that telecommuters do at home can also be done in a New York office, the vast majority of telecommuters could not meet this test.
On May 15, 2006, New York announced that it had revised its telework tax policy. The policy itself, however, is essentially the same: Nonresidents who want to avoid the double tax risk will still effectively have to prove that telework is an employer necessity, and, for most telecommuters, proving necessity will be just as difficult as it was under the old policy. For example, now, a telecommuter might have to show that his employer pays him rent for the use of his home office, that he never does any personal work in his home office, or that his employer’s advertising material shows his home office as one of the company’s places of business. These are conditions very few telecommuters will be able to meet.
“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,” Chuck Wilsker, TelCoa’s President and CEO said in a prepared statement. “Since New York won’t get rid of the tax on interstate telework, Congress has to do it.”