NY Relaxes 'Convenience of Employer Test'

May 31, 2006 (PLANSPONSOR.com) - A new memorandum by The New York State Department of Taxation and Finance could mean that the state is softening its attitude toward telecommuter workers, saying that the days a person works at home will not be counted as New York days if the home office is a "bona fide employer office."

The “convenience of employer test” holds that all nonresident employees’ income from work done at home in another state is taxable by New York, unless the remote working is done for the employer’s necessity,” not the employee’s convenience.

Other states like Nebraska and Pennsylvania have set similar rules, but New York is believed to be the most austere enforcer of the “convenience” test, according to the Wall Street Journal.

For tax years beginning on or after January 1, 2006, the state’s tax department said in thememo that taxpayers whose primary office in is New York State, any normal work day spent at home “will be treated as a day worked outside the state” if the home office is a bona fide employer office. Any day spent at the home office that is not a normal work day would be considered a nonworking day.

The office must meet a “primary” test or at least four “secondary” factors, plus some other conditions. The primary test is that the home office either contains, or is near, “specialized facilities.”

class=”times”> The secondary factors include that:

  • the home office is a “requirement or condition of employment.”
  • the employer has a “bona fide business purpose” for the employee’s home-office location.
  • the employee performs some of the “core duties” of the job at the home office.
  • the employee regularly and continuously meets or deals with clients, patients or customers at the home office.
  • the employer reimburses home-office expenses.
  • the employer doesn’t provide the employee with designated office space or other regular work space at one of its regular offices.