Goldburd | Goldburd McCone LLP

For nationwide tax guidance, call:
212-302-9400 or toll-free at 844-653-2873.

Goldburd | Goldburd McCone LLP

For nationwide tax guidance, call: 212-302-9400 or toll-free at 844-653-2873.

Serving Individual And Corporate Tax Clients Nationwide From Our New York, New Jersey, Florida And California Offices

Steven Goldburd and Benjamin A Goldburd

Since 1983, our tax firm has skillfully represented individuals and corporations across the United States and around the globe from our offices in New York, New Jersey, California and Florida.

Will New York change its tax rules for remote workers?

On Behalf of | May 28, 2024 | Tax Collection

New York income tax is one of the most high and aggressive. In fact, the state is one of the few that will tax employees even if they do not work in New York. The employer test allows officials to achieve this reach. They achieve this reach through use of the convenience of the employer test.

New York is one of few states to use this test, which essentially declares the New York state income tax is only avoidable to individuals physically working in a different state, meeting certain employer-based requirements. Working from one’s home in another state does not remove the requirement to pay New York state income taxes. To avoid these taxes, the employee must show that they could not have completed the work in New York or that the employer required the worker to complete the work out of state.

A recent case tested this rule. The interesting part of this case is the application of the convenience of the employer test during the COVID-19 pandemic. New York Governor Andrew M. Cuomo issued multiple executive orders including a state disaster emergency. The United States Health and Human Services Secretary, Alex M. Azar II, declared a national public health emergency. The nation was on lockdown.

Would that be enough for remote workers to avoid New York state taxes when they live and work in a different state? The case involves a professor who conducted classes and research from his home in Connecticut during the pandemic. He argued that he should not pay New York state income taxes for the income earned during the pandemic because he was working from his home in another state. Ultimately, the court disagreed.

The court used the following to explain their rationale:

  • Employer did not provide accommodations. Employee simply worked out of own home.
  • Work was not specialized enough to require completion outside of New York.
  • Taxpayer remotely connected through New York office to complete work tasks.

The court goes on to explain that it would be improper to use the pandemic to provide special tax benefits to those who do not live in New York.

This case is just one example of many that are moving forward pushing against this aggressive rule. Other states, including New Jersey and Connecticut, are encouraging residents to take similar legal action. Although New York authorities do not seem poised to change this rule in the near future, this renewed push triggered by remote work due to the pandemic could lead to change.

In the meantime, taxpayers who find themselves navigating these types of legal issues can take comfort in the fact that they are not alone. Taxpayers throughout the country, from Florida to California, are fighting against New York’s aggressive tactics. The attorneys at Goldburd McCone have experience in these matters and can discuss strategies to fight back when taxpayers receive notification of an impending audit or outstanding tax obligation.