New York Court Puts Tax Bite On Telecommuting

WSJ on the latest from Big Brother...

In a case that could have wide implications for the growing practice of telecommuting, New York's highest court ruled that a man who lives out of state and works by computer for a New York firm must pay New York state tax on his full income.

The New York 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.

Mr. Huckaby, whose home state doesn't have an income tax, paid New York state tax on about 25% of his income over two years for the time he spent working there for the National Organization of Industrial Trade Unions.

The court upheld a state tax-department ruling that all his income should be taxed. That amounts to $4,387 plus interest. However, the ruling could lead to much greater income for the state as it is applied to the growing field of telecommuting.

...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 issue split the court, and the majority acknowledged the decision could discourage telecommuting. [Oh, really...]