Tuesday, March 29, 2005

Court Rules Telecommuter Must Pay Taxes

Court Rules Telecommuter Must Pay Taxes: "A telecommuter who lives out of state while working by computer for a New York employer must pay New York tax on his full income, the state's highest court ruled Tuesday in a case that could have wide implications in the growing practice.
The Court of Appeals said that computer programmer Thomas Huckaby who lives in Nashville, Tenn., owed New York income tax for his full salary, not just the time he spent working at his employer's New York offices."
``New York has the right to tax 100 percent of a nonresident employee's income derived from New York sources,'' according to the 4-3 decision by Court of Appeals. The court relied on a fairness rule called the ``convenience of the employer'' under law that says a worker's income is taxable if he chooses to live outside the state, as opposed to if he or she was transferred there.

In a strong dissent, Judge Robert Smith argued that the basis of the majority's decision that all income is taxable is ``that the commissioner says it is ... The majority cites no authority at all, and offers no persuasive reason, in support of this new interpretation.''

``To say a person's taxability depends on where his employer is wrong,'' said Huckaby's attorney, Peter Faber of New York City. ``I think this is an issue of national significance.''

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