NY → IL mid‑year move, remote work and NY wage allocation under convenience rule

[jackkgan]

I moved from NY to IL mid‑year and worked fully remotely after the move. My NY‑based employer does not require me to work in the NY office and expects me to work remotely; I performed all services from IL after the move. For NY nonresident allocation, is it reasonable to allocate wages based on days physically worked in NY vs outside NY (115/261), or does NY typically still require treating all post‑move remote days as NY‑source under the convenience‑of‑the‑employer rule in this situation?

[maglib · Accepted solution]

1. Remote workers who are 100% remote from outside New York State and NEVER come to the New York office are not subject to the convenience rule. See Matter of Hayes v State Tax Commission, 61 AD2d 62, 64 [3d Dept 1978]; Therefore, if you are an employee working remotely from outside of NYS, make sure your agreement states that you have no obligation to report to the New York office at all. All meetings should be held remotely.

2. The agreements MUST Comply with the bona fide employer office rule in TSB-M-06(5)I.

3. The convenience rule applies when the employee is assigned to a New York office, regardless of the state he works remotely from. If a business has multiple offices and it’s possible to reassign the employee to a different office, the New York convenience rule would not apply. 

If you are a nonresident and your primary office is in NYS,  and your employer withholds NYS taxes then you most likely do NOT meet the convenience rule nor the rule that you never have to come to NYS.  Then all days telecommuting are days worked in NY unless your employer established a bona fide employer office at your telecommuting location. “The policy justification NYS utilizes is that since a New York State resident would not be entitled to special tax benefits for work done at home, neither should a nonresident who performs services or maintains an office in New York State” (Speno v Gallman, 35 NY2d at 256).

New York State established rules in Technical Service Bulletin TSB-M-06(5)I, which states that if the employee’s home outside of New York qualifies as a bona fide office of the employer, then the days worked at this home office will be treated as days worked outside of New York.  Please see TSB-M-06(5)I for details on what constitutes a bona fide employer office. It can be found here: https://www.tax.ny.gov/pdf/memos/income/m06_5i.pdf

(added INFO: Many companies have offices outside of NY and will often assign employees to those offices to eliminate this burden.  Do note anyone who works in NY for more than 14 days would also be subject to non-resident NY withholding taxes.).

@jackkgan