The Tax Appeals Tribunal upheld an ALJ’s determination that a taxpayer’s wages earned from working remotely in Connecticut were sourced to New York and subject to tax. For decades, New York has adopted the convenience of the employer test (Rule), which deems a nonresident who teleworks outside the state to be working at its employer’s New York location (and, hence, such wages would be New York-sourced), unless the nonresident teleworks out of necessity for the employer and not just for the employee’s convenience.
During the COVID-19 pandemic, the taxpayer, Professor Zelinsky, was required to telework from his home in Connecticut because New York issued an executive order requiring non-essential workers to telework and because his employer prohibited access to his New York office. The Tribunal held that even though Professor Zelinsky did not work in New York, he had sufficient minimal contacts with the state to satisfy due process. The Tribunal reasoned that the professor availed himself of the state’s economic market through his New York-based employer, even though he spent less than 10% of his total working days in the state. The Tribunal also held that the Rule did not violate the dormant Commerce Clause because if the Rule was applied in every state, double taxation would be avoided, and the Rule only taxes wages from activities performed in the state.
Matter of Zelinsky, DTA Nos. 830517 & 830681 (N.Y.S. Tax App. Trib. May 15, 2025).
This is Professor Zelinsky’s second attempt to take down the Rule. See Zelinsky v. Tax Appeals Tribunal, 1 N.Y.3d 85 (N.Y. 2003), cert. denied, 541 U.S. 1009 (2004).