NYS Denies COVID-19 Tax Relief for Telecommuters

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.

Matthew McCullough Matthew McCullough, EA is a Tax Controversy Principal at Grassi. He works across a variety of industries including but not limited to Construction, Architecture & Engineering, Manufacturing & Distribution, Real Estate, and Not-For Profit. Matthew is proficient in tax audits for the IRS, New York State, New Jersey, Connecticut, California, Florida, Texas, and many others. His areas of specialty include sales tax audits, franchise... Read full bio

Jeffrey G. Cohen Jeffrey G. Cohen, CPA is the Partner-in-Charge of Tax Services at Grassi. With over 30 years of experience, Jeff specializes in serving companies within the Manufacturing and Distribution Industry, with an emphasis on the Food & Beverage and Pharmaceutical sectors. A leading tax expert in the New York Metropolitan area, Jeff has enabled his clients to realize significant tax savings through proper Income and... Read full bio