In an earlier decision, Thomas Huckaby of Tennessee, who telecommutes with an employer in Queens, was ordered to pay income tax on 100% of his income according to a state policy allowing New York to tax the income of telecommuters. In the years 1994 and 1995, Huckaby spent 75% of his time working inTennessee and apportioned his income accordingly between the two states – 75% forTennesseeand 25% forNew York. New York,though, said 100% of Huckaby’s income should be subject to income tax in enforcing a law meant to ensure non-residents pay their fair share for the services they receive by virtue of working for aNew Yorkemployer.
Applying the “convenience of the employer ” test, i n May 2004, the Appellate Division for the 3 rd Department found that since Huckaby worked from Tennesseefor his own convenience rather than employer necessity, all of his earnings are taxable underNew YorkState’s tax rate (See TN Resident Subject to NY Tax ).
A New York Court of Appeals rejected challenges from Huckley to this so-called “convenience of the employer” test, ruling that Huckley could be taxed on his total income. The Court of Appeals of New York decision said, “New York has the right to tax 100 percent of a nonresident employee’s income derived from New York sources.” (See NY To Continue Out-of-State Telecommuter Taxes ).
The Associated Press reports that the computer programmer appealed the case to the Supreme Court, claiming that New York’s tax law is unconstitutional.
The case is Huckaby v. New York StateDivision of Tax Appeals, 04-1734.