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NTU Supports H.R. 2558, the Telecommuter Tax Fairness Act
June 10, 2005
The Honorable Chris Shays
Dear Representative Shays:
On behalf of the 350,000 members of the National Taxpayers Union (NTU), I write to offer our strong support for your legislation, the Telecommuter Tax Fairness Act (H.R. 2558), which would end New York State's destructive policy of requiring employees to pay income tax in that state regardless of where the work was performed -- so long as the work could be performed in New York.
This legislation addresses what is already a major problem for telecommuters working in New York and what could be a potential nightmare for the nation's 24 million employed telecommuters (a statistic compiled by the 2004 International Telework Association and Council American Interactive Consumer Survey). Recently, New York's Court of Appeals ruled that a computer specialist from Nashville, Tennessee had to pay New York taxes on 100 percent of his income from a New York employer even though he spent only about 25 percent of his time in New York and the other 75 percent in Tennessee. The computer specialist, Thomas L. Huckaby, had argued that he owed New York tax on only 25 percent of his pay.
At issue is a New York tax department regulation, adopted decades ago, that affects many employees who live in another state and work for New York employers. The rule governs when their income may be excluded for New York tax purposes. Under this rule, income from work in another state is taxable by New York unless it is done out of state for the "necessity" of the employer.
Obviously, this "necessity of the employer" rule is unfair to employees of New York businesses who are taxed once on 100 percent of their incomes by New York and also must pay taxes levied by their home states. In addition to ending this discriminatory practice, H.R. 2558 is a good way to promote telecommuting. Although currently no other state besides New York applies its laws this way, as telecommuting becomes more common, states will be tempted to apply their laws in similar fashions that harshly penalize out-of-state workers.
NTU and its members work to promote tax policies that are fair and equitable. This common-sense legislation addresses an unfair and inequitable law that is clearly within the purview of the United States Congress to change. We hope to work closely with you toward passage of the Telecommuter Tax Fairness Act.
Paul J. Gessing