Virtual Work and Taxation Jurisdiction

High Court Rules Telecommuter Living Out of State Owes Full New York Taxes

A man who lives out of state while working by computer must pay New York tax on his full income, the state’s highest court ruled Tuesday in a case that could have wide implications for the growing practice of telecommuting.

The Court of Appeals said 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.

[…] Huckaby’s attorney, Peter Faber, said the case is the first of its kind involving the income tax liability of a telecommuter. He said he may appeal to the U.S. Supreme Court because most states base income tax liability on the residence of the taxpayer.

“To say a person’s taxability depends on where his employer is wrong,” Faber said.

But Marc Violette, spokesman for state Assistant Solicitor General Julie Mereson, said: “New York provides the job, New York provides the professional opportunity, and New York should be able to tax that income, even if the employee for his own convenience was working outside of New York state.”

The opinion: In the Matter of Thomas L. Huckaby v. New York State Division of Tax Appeals, Tax Appeals Tribunal, et al.

Later: NYTimes’ Telecommuters Not Exempt From New York Tax