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Tuesday, March 29, 2005
Does a Tennessee resident have to pay taxes in New York? The State Court of Appeals thinks so:
A man who lives out of state while working by computer must pay New York tax on his full income, the state's highest court ruled Tuesday in a case that could have wide implications for the growing practice of telecommuting.
The 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.
Huckaby, whose home state doesn't have an income tax, paid New York state tax on about 25 percent 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.
So how does the court come to this decision? Apparently, because the employee chose to live elsewhere, he is liable for making that choice. Never mind that the choice was one that saved his company thousands of dollars by allowing him to live in an area of the country with a smaller cost of living. Ironically, the law cited is called the "convenience of the employer."
How does the state tax a resident who is not represented in that state? I don't see where the plaintiff received any governmental benefit from the state of New York. Would this person qualify for New York's subsidized health care, or TennCare? Can Mr. Huckaby vote for New York government? No, he cannot. Wasn't there a precedent for this in... oh, the 18th century?
How would this have affected the plaintiff if he lived in a state where there was an income tax? Does anyone think double taxation is fair in this case? How about if he lived in New York and worked in Tennessee? Would he then have owed NO taxes? Hopefully, this absurd case goes to the Supreme Court, as I can only think it will be overturned.
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