Telecommuting Tax

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Telecommuting Tax

A pretty important case was just decided on in New York according to the Wall Street Journal. 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.

Mr. Huckaby's attorney, Peter Faber, said the case is one of the first of its kind involving the income-tax liability of a telecommuter. He said he may appeal to the U.S. Supreme Court because most states base income-tax liability on the residence of the taxpayer.

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."

This case has dramatic implications for telecommuters everywhere and could potentially reduce the talent pool that companies in big cities have access to. Another potential result is that companies will likely have to pay higher wages as out of state workers may not be so eager to work for companies in states with high taxes. In reducing the talent pool, salary levels will likely rise.



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