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Sunday, December 20, 2009

New York's 'Convenience of the Employer Test'

Brian C. Borie (J.D. 2009, Albany) has published Comment, The Convenience of the Employer Test: Why We Should Reconsider the Critique of New York's Tax Apportionment Scheme, 72 Alb. L. Rev. 789 (2009). Here is part of the Conclusion:

As the courts and the legislature have recognized, the convenience test and its application are not without flaws, but a tax system is never absolutely perfect; small inequities are always a threat. As the court in Zelinsky noted, "in the absence of the convenience test, opportunities for fraud are great and administrative difficulties in verifying whether an employee has actually performed a full day's work while at home are readily apparent."  Put simply, the convenience test is significantly more efficient at preventing fraud than the alternative physical presence test. With telecommuting becoming more popular, there will undoubtedly be more opportunities for fraud in the future. New York must remain vigilant and guard itself from tax fraud through the use of the convenience test.

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In one on these NY cases a person was living in TN and was asked by a NY company to work for them. He said yes, but on the condition that he could continue to live in TN by telecomuting from TN. The NY courts held that all his income was NY based income under the "convenience of the employer" test. Only a few states have this test, and none apply it as vigorously as NY. This issue is not one of fraud, but of equity for telecommuters.

Posted by: Beau Baez | Dec 20, 2009 12:19:52 PM

Considering New York's prior attempts to violate the Constitutional Rights of nonresidents through the imposition of higher taxes than those imposed on it residents, nonresident taxpayers must remain vigilant and guard themselves from New York's special brand of tax fraud. See Travis v. Yale & Towne Manufacturing Co., 40 S.Ct. 228, (1920) and Lunding v New York Tax Appeals Tribunal, 522 S 287 (1998). Based on its prior performance, it is my view that Courts should deal very harshly with New York when it comes to its attempts to put the squeeze on nonresidents. The "convenience of the employer test" is nothing more than a device created to permit states to swindle nonresidents as was done in the case involving the Tennessee resident.

In the spirit of the season what more can I say than yes, Virginia, there is a Privileges and Immunities Clause in the United States Constitution. Virginia is the only state that I have found that currently descriminates against nonresidents by requiring MFS returns unless both nonresident spouses have Virginia income. In 1823 in Corfield v. Coryell it was found that states could not descriminate against nonresidents thorough the imposition of higher taxes. The irony of Virginia's unconstitutional imposition of the MFS requirement is that the justice who wrote the opinion in Corfield v. Coryell was a native son of Virginia, Bushrod Washington. Oh, did I mention that Virginia's MFS requirement violates Virginia Code section 58-1.324.

Posted by: WD Kebschull | Dec 20, 2009 6:33:31 PM