NTUF recently filed an amicus brief in Matter of Zelinsky v. Commissioner of Taxation and Finance of the State of New York on the side of the plaintiffs, Professor Edward Zelinsky and Doris Zelinsky. The Zelinskys are challenging New York’s so-called “convenience of the employer” rule, something NTUF has long opposed both for policy and constitutional reasons.
Edward Zelinsky is a professor at the Cardozo School of Law at Yeshiva University in New York City. Yet, even for days when Professor Zelinsky teaches from his home in Connecticut, New York claims that he owes New York income tax, due to the convenience of the employer rule.
New York’s convenience of the employer rule essentially states that, when taxpayers switch from working in New York for a New York-based employer to working remotely, in another state, for the same New York-based employer, they still owe tax to New York. In other words, New York holds telecommuters liable for New York state income tax even if they are physically in another state.
There are a few problems with this. The biggest is that it can expose the telecommuting taxpayer to double taxation, as the state where they are physically working may also claim the power to tax their income. Taxpayers in this unfortunate situation can quickly find themselves to be the rope in a tug-of-war between two state revenue departments.
But, at a more fundamental level, it cuts to the issue of tax fairness. Few taxpayers have any illusions that they will receive back in government services and benefits precisely what they pay in taxes, but there is a reasonable expectation that taxes paid will at least go to the state or locality that facilitated it. Someone working in Georgia knows that, however else they feel about the taxes they owe, at least Montana is not going to claim a slice.
After all, the government services that Professor Zelinsky relies on when he works from home in Connecticut all come from Connecticut, not New York. Connecticut, not New York, provides the infrastructure that powers his home and internet. Connecticut, not New York, supports the businesses Professor Zelinsky travels to for supplies. Connecticut, not New York, would respond with emergency services should Professor Zelinsky have need of them.
New York argues that Professor Zelinsky’s choice to work from home is simply a matter of “convenience,” and that it should not impact his tax treatment. By that logic, everyone in America should pay state income taxes to New York, as they are simply indulging in a convenience by not flying into LaGuardia each day to hop on their laptops in a New York Starbucks.
This already-specious argument falls apart entirely in the face of the circumstances of the COVID-19 pandemic. Despite the fact that Professor Zelinsky was required to work from home by clear orders from every level of government, New York implausibly argues that this still remained a matter of convenience, as he “was free to work remotely from within New York.” At a time when any nonessential travel was being actively discouraged in no uncertain terms, the idea that Professor Zelinsky was simply enjoying a “convenience” by not driving to a New York Starbucks for work every day is patently absurd.
NTUF therefore encourages the reversal of lower court judgments denying Professor Zelinsky’s request for refunds for income taxes paid to the state of New York, as well as the finding that the convenience of the employer rule itself is an unconstitutional tariff, something the Supreme Court has referred to as “the quintessential evil targeted by the dormant Commerce Clause.”