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 ·Verizon FiOS
| like or not, this is the deal ... The NY income tax is imposed not only on NY residents, but on non-residents when the source of the income is from within NY. There is nothing unconstitutional about this basis of taxation, and several states (CA and OH that I know of) use it. If you are not a resident of NY but get hit with some NY source income, you can usually declare an offset on your home state tax return for the income that is to be taxed in NY (typically it is called "credit for taxes paid to another state," but it is not a dollar-for-dollar tax credit, but rather an allowance against your taxable income; thus if your home state tax rate is lower you'll see less of a reduction in your home state tax than the amount you owe to NY...).
There is nothing new here except the inexperience of the guy's company. The company has no formal business presence in TN, only in NY. If they had seen it coming, they should have established a corporate "field office" in TN at the guy's home address and staffed it with one employee. It would have meant taking out a business license in the TN town and some other minor paperwork, but that would pale in comparison to all the sturm und drang that has now been wasted on the court battles.
dw | |
 GlobalMindDomino Dude, POWER Systems GuyPremium
join:2001-10-29
Hollywood, FL | Dick,
Good points. This is why I don't think at least in my situation that this type of thing would fly.
From what I can see here if your company has an office in the state which you reside, regardless of whether or not you actually work in that office...you're covered.
K.
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TheGlobalMind.com
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·Verizon FiOS
1 edit | yup, the key here is the combination of state rules and business organization. Not all states have source income taxes, so nonresidents employed by a company organized in an ordinary tax state have no problems - they pay tax only to their home state no matter where they earned it. (And if, like you, they live in a no-tax state, they pay no tax.) But if the company is organized in a source-tax state, then they need to carefully reorganize their business so non-resident employees have a "source" of income from outside the parent corp. state.
And then you get into all the various forms of organization. As previously noted, "contract" workers have a whole different set of issues to deal with (including the legal questions of whether they are truly independent contractors or actually employees but incorrectly assigned as non-employees), and then there are partnerships. If the partnership has a multi-state presence (think law firms and accounting firms with NYC and LA offices...), the general partners owe will income tax to several states in proportion to the total partnership income from those states even if they work only in one of the offices.
It is wild, and as I said before, the problem here is that the company lawyers and accountants appear to have had no clue of the business/tax environment they were operating in. It's too bad they created so much trouble for the poor schmuck in TN. He deserved better from his employer.
dw | |
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