@DanielV01 - Thank your for the informative follow-up, this was definitely helpful.
The rules set forth in 20 NYCRR 132.4(b) contradict the direction being provided, however: they explicitly state that the compensation earned by a nonresident working wholly without the State, regardless of whether the income is coming from an employer located within New York, is not counted as New York adjusted gross income for that individual. Following the instructions for Form IT-203 (see "Who must file?" on Page 7), it is only required for an individual with a NY AGI exceeding their NYS standard deduction to file Form IT-203 (there are 4 other requirements listed that could trigger the need to file, but assume that none of these apply for the sake of discussion). Assuming that such an individual's only earnings from NYS come from this employer, it seems very possible that their NYS AGI would be $0 per 20 NYCRR 132.4(b).
If an individual should never expect to visit NYS during the year, it's also possible that their employer would not withhold
any state taxes. Per Technical Memorandum
TSB-M-12(5)I, the employer is not necessarily required to withhold taxes if the nonresident employee shall work less than 14 days in NYS. Given this scenario, a nonresident employee working wholly without NYS would have $0 in withheld taxes and would not be concerned about filing for a refund, but they would still be concerned whether they actually have any NYS Tax Liability.
20 NYCRR 132.4(b), seems to directly state that nonresidents employees working wholly without NYS are not required to pay taxes on these wages earned. It's very confusing because the NYS Tax Laws and forms previously referred to in this thread all seem to imply otherwise, but none of them explicitly detail the scenario when a nonresident never steps foot within the State.
