Paul L. Caron

Saturday, July 16, 2005

Spotlight_2Edward A. Zelinsky (Cardozo)

      • B.A. 1972, Yale
      • M.A. 1975, Yale
      • J.D. 1975, Yale
      • M. Phil. 1978, Yale      


Unquestionably, the most interesting part of my current professional life is my ongoing fifteen minutes of second-hand fame from being the father of Jacoba Zelinsky Urist. Jacoba (herself an NYU-educated tax lawyer) is the author of a forthcoming novel about practicing tax law in Manhattan, Six Minutes in the City  [Editor's note:  blogged here last month.].

Much of the pre-publication speculation has focused on who provided the model for Earl Lewis, the senior partner of the fictional firm at which Jacoba’s protagonist practiced tax law. Of far greater interest, I think, is the protagonist’s father: an irascible, outspoken professor of tax law. This opinionated father is an obviously fictitious character whom Jacoba fashioned wholly out of her imagination.

Jacoba grew-up describing law professors in general (and her father in particular) as people who write things nobody reads. Until now, I always dismissed this observation as youthful arrogance and have admonished Jacoba that she would some day learn the difficulties of obtaining an audience. My admonition, however, seems less convincing today.

Before my recent and reflected fame as Jacoba’s father, my best claim to renown was as the pro se litigant in Zelinsky v. Tax Appeals Tribunal, 1 N.Y.3d 85 (2003), cert. denied, 541 U.S. 1009 (2004). In that case, I challenged on constitutional grounds New York’s so-called “convenience of the employer” doctrine. Under that doctrine, New York imposes its nonresident income taxes on days the nonresident works at his or her out-of-state home. After I failed abysmally in the New York courts and was denied certiorari by the U.S. Supreme Court, Senator Chris Dodd and Representative Chris Shays (both of Connecticut) introduced in their respective houses companion bills (S. 1097 and H.R. 2258, The Telecommuter Tax Fairness Act of 2005) to accomplish legislatively what I failed to achieve judicially, i.e., abolish New York’s employer convenience doctrine.

The constitutional infirmity of that doctrine has been noted by many commentators (See, e.g., Jerome R. Hellerstein & Walter Hellerstein, State and Local Taxation 28 (6th ed. 1997).) For someone like myself (who does much of his writing on days at home in New Haven), New York’s policy results in a double tax: New York taxes the income allocated to a day worked at home in New Haven under the employer convenience doctrine; Connecticut taxes the same income attributable to that day on the persuasive theory that the activity generating the income – my writing – physically occurs in Connecticut. In this setting, New York’s taxation with respect to nonNew York days runs afoul of the constitutional rule of apportionment articulated in such cases as Complete Auto Transit, Inc. v. Brady, 430 U.S. 274 (1977), and Central Greyhound Lines, Inc. v. Mealey, 334 U.S. 653 (1948).

For two reasons, the double tax problem caused by New York’s employer convenience doctrine became particularly acute during the 1990s. First, states previously without personal income taxes (e.g., Connecticut) adopted them. It was one thing for a Connecticut resident to pay New York taxes – but only New York taxes – on a day worked at home in Connecticut. Once Connecticut adopted its own income tax, however, the Connecticut resident working at home was taxed twice on days worked at home.

Second, the emergence of what is now called telecommuting has dramatically increased the number of people working at home. Indeed, it was a legal commentator on telecommuting, Nicole Belson Goluboff, who alerted me to the nationwide implications of New York’s employer convenience doctrine:  New York has sent tax bills to individuals throughout the nation for days worked at home for New York companies. (See, e.g., Nicole Belson Goluboff, Put The Telecommuter Tax Fairness Act in the Passing Lane, 2004 State Tax Notes Today 211-2 (Oct. 6, 2004).)

For many years, I had been filing my New York nonresident returns in open defiance of the employer convenience doctrine. I then received deficiency notices, asserting New York income taxes for for my days worked at home in New Haven. My wife Doris (who is now immortalized as the et al of Zelinsky et al and bears absolutely no resemblance to the protagonist’s mother in Jacoba’s book) responded to the deficiency notices with the characteristic cynicism of an experienced businesswoman, skeptical of lawyers, courts, and tax collectors. But, as mid-life crises go, she admitted that pro se litigation is fairly innocuous.

As the case made its way through the New York courts, I received strong support from Connecticut’s attorney general, Richard Blumenthal, and Connecticut’s Commissioner of Revenue, Gene Gavin, who had previously been outspoken about New York’s overreaching under the convenience employer doctrine. I also received strong amicus support from the Partnership for the City of New York as New York’s major employers think the employer convenience doctrine is bad for them and for New York’s economy.

I think it is only a matter of time before New York abandons or is forced to abandon the employer convenience doctrine. The Dodd-Shays legislation makes its way through the legislative process; I recently testified before subcommittees of the House Judiciary Committee. (See 36 State Tax Notes 713 (2005).)

Another employer convenience case, Huckaby v, Tax Appeals Tribunal, 4 N.Y.3d 427 (2004), is now pending before the U.S. Supreme Court. In Huckaby, New York assessed nonresident income taxes for days worked at home in Nashville, Tennessee. Moreover, in Huckaby, Justice Robert S. Smith, who joined the New York court after my case was heard, convinced two of his colleagues to join his dissent. Perhaps, this will persuade the U.S. Supreme Court to hear Huckaby.

Finally, Governor Pataki has recently appointed a tax reform commission. The only lawyer on the commission, Peter Faber, has long criticized the employer convenience doctrine and is the taxpayer’s lawyer in Huckaby.

All of this suggests that litigating my case was worthwhile. First, it was a lot of fun. Second, the case brought public attention to the issue and may have contributed to the demise of the employer convenience doctrine. Finally, on days when I commute to Manhattan to teach at Cardozo, I am occasionally identified in the Metronorth bar car as the guy who challenged New York’s tax department. I thus get my afternoon ginger ale for free from fellow Connecticut commuters (who have little love for the New York fisc).

Doris points out that I will recover our out-of-pocket costs of the litigation in free ginger ale – if I live to be 127.

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