TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Monday, January 3, 2005

NY Court of Appeals to Hear Telecommuter Tax Case

Back in September, we blogged the unsuccessful attempt by Cardozo Tax Prof Edward Zelinsky to avoid paying New York state income tax on the portion of his salary attributable to his work in his Connecticut home office.  The New York Court of Appeals is scheduled to hear oral argument this week in Matter of Huckaby v. New York State Division of Tax Appeals.  According to, Mr. Huckaby has a much more tenuous connection to New York than Prof. Zelinsky:

To whom does a telecommuter pay state income tax? Most states resolve the issue by simply apportioning income....  New York, however, has different ideas on how to tax out-of-state residents. In New York, if the employee works out of state for convenience rather than employer necessity, the state clams it is entitled to tax 100 percent of the income earned. Since some states, such as Connecticut, base their income tax on where the taxpayer lives rather than where the income is earned, that means some workers are subjected to double taxation on the same income.

Virtually all of New York's neighbors have urged it to revise its tax code and eliminate the convenience of the employer test, but Albany is loathe to abandon a source of income that brings in around $100 million annually. U.S. Senator Christopher Dodd, D-Conn., has gone a step further with his "Telecommunications Tax Fairness Act." Dodd's bill would bar states like New York from collecting taxes for work performed out of state. The bill was prompted by the case of Edward Zelinsky, a professor who teaches tax law at the Benjamin N. Cardozo Law School in Manhattan but frequently works from his home in New Haven, Conn. Zelinsky challenged New York's tax scheme but lost at every level of state court and then was denied certiorari by the U.S. Supreme Court.

Huckaby, however, raises different issues, which Peter L. Faber of McDermott, Will & Emery in Manhattan hopes will yield a different result. Unlike Zelinsky, Huckaby is a telecommuter. Also unlike Zelinsky, Huckaby's principal place of business is outside of New York -- so far outside New York that he rarely and only indirectly benefits from government services in the state. Huckaby lives approximately 900 miles from Manhattan.

"Mr. Huckaby's case presents the plight of a nonresident telecommuter," Faber argues in his brief. "Telecommuting did not exist when the regulation at issue first appeared on the scene, but it is widespread now." Faber contends that the convenience of the employer test, as applied to Huckaby, is in violation of the equal protection and due processes clauses of the U.S. Constitution and contrary to "common sense."

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I live in Boston and telecommute to Michigan. I work exclusively in my home office. I've been to my corporate offices once in 2 years.

In truth, then, I do not work in Michigan in any meaningful way. I pay Massachusetts taxes, and it would be rediculous to tax me in Michigan.

I think the Zelinsky case is more reasonable. He actively travels between New York and Connecticut and his telecommuting is little different than someone taking home work in their briefcase.

Posted by: Rick (Centrist Coalition) | Jan 3, 2005 2:49:18 PM

In an opinion issued today in a 4-3 decision, the New York Court of Appeals just upheld the "convenience of the employer" rule in Huckaby.

Posted by: Tom | Mar 29, 2005 12:37:12 PM