With the COVID-19 pandemic sending many employees to home offices outside the states in which their employers’ primary offices are located, many states are responding with temporary relief from mandated withholding tax requirements.
Unfortunately, New York is not one of those states. NYS has issued informal guidance requiring employers to continue to withhold on nonresident employees who are telecommuting, unless the employee can establish that he or she is working from a bona fide employer office.
The key to establishing this is the NYS Convenience of the Employer rule, which requires that days worked outside NYS must be based on necessity or obligation to the employer in order to avoid state income tax obligations. In other words, the employee’s duties must require him or her to work from the remote location. Work-from-home employees typically do not meet this requirement and are subject to the state’s withholdings on all NYS-sourced income.
In a recently published Frequently asked Questions, NYS confirmed that if a non-resident employee, whose primary office is in the state but who is telecommuting from another state due to the pandemic, the telecommuting days are still considered days worked in NYS unless the requirements of the Convenience of the Employer rule are met.
