March 29, 2005

Telecommuter Taxed

In an email from Ben Cunningham comes this story:

"A telecommuter who lives out of state (Nashville, Tennessee) while working by computer for a New York employer must pay New York tax on his full income, the state's highest court ruled Tuesday in a case that could have wide implications in the growing practice.

The Court of Appeals said that 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."

It seems that even though the person was working in Tennessee, he will have to pay New York tax on his income because the company was based in New York.

This is interesting because I have a friend that works at Opry Mills Mall. Just yesterday I found out that because the company she works for in the mall is based in North Carolina, she has to have North Carolina taxes taken out. This, of course, disturbed me.

The above story is different in that the guy was a telecommuter working from home and did spend some time in the New York office, but based on this ruling the implications are huge for this type of practice to spread to people that simply work at a company that might be based somewhere else (like my friend at Opry Mills). Maybe I'm reading too much into this though.

But, this little bit seems to enfoce that:

"New York has the right to tax 100 percent of a nonresident employee's income derived from New York sources," according to the 4-3 decision by Court of Appeals.

Also consider if Tennessee had an income tax. Who would get the tax money? Presumably both states would get their share hurting the worker even more.

If there is anything worthy of the title "BS," this would be it.

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