In 2005, a controversial court case pitched one man against the state of New York.  The man was Thomas Huckaby of Tennessee, and his offense, according to the New York State Tax Department, was that he was – to put it simply – a telecommuter. 

Mr. Huckaby worked for a company based in Jamaica, Queens, New York, but worked 75% of the time from his home in Tennessee.  When he reported only 25% income in New York, the state invoked the vague “convenience of the employer” rule (whereby “a nonresident employee" may allocate income between two states, but only if it is for the employer’s convenience) and ordered Huckaby to file 100% of his income as taxable in New York.  The high court of New York sided with the state, citing the rule as stated above.  It should be noted that the Huckaby vs. New York case is a rather extreme example of the harshest tax laws applied to telecommuters; all states, though they may currently have a right, do not follow such strict edicts and in effect “double tax” their telecommuters.  (see the article “Telecommuting Taxes and the Convenience of the Employer,” SmartPros, June 2005)

 As discussed in the article “Telecommuting and its Effect on State Income Taxes” (Rothernberg, The CPA Journal, March 2006) state income tax laws and regulations are quickly being outpaced by the rapid adoption of telecommuting programs, wherein employees may reside in one state, working from home part of the time, but travel to another state(s) to perform other work-related duties.

 A new bill, “The Telecommuter Tax Fairness Act of 2005”, was introduced in the Senate by Christopher Dodd (D – CT) in May 2005 to in effect prohibit the use any policy which leads to double taxation of telecommuters or anyone who works from home (it would bar the “convenience of the employer” rule).  The bill has stalled in the Senate after being referred to the Committee on Finance. 

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