New York Professor Denied Tax Withholding for Out-of-State Pandemic Remote Work

Quick Hits

• A New York appellate court found that a pandemic-related office closure does not exempt nonresident employees from New York income tax on out-of-state earnings.
• The court found that the nonresident employee’s full income was taxable under the state’s convenience of the employer rule because the nonresident employee’s out-of-state remote work situation during the pandemic was not due to the employer’s necessity.
• The court further rejected constitutional claims to the application of the convenience rule, finding a government work-from-home mandate did not require work to be done in other states and that the employee’s work for a New York institution established sufficient contacts with the state.

In Matter of Zelinsky v. Commissioner of Taxation and Finance, the State of New York Supreme Court Appellate Division, Third Judicial Department, upheld a determination by the Tax Appeals Tribunal denying New York State personal income tax refund claims for the 2019 and 2020 tax years by Connecticut residents for work performed out-of-state during the COVID-19 pandemic.

The appellate court rejected constitutional and regulatory challenges by Edward Zelinsky, a Connecticut resident and law professor at Benjamin N. Cardozo School of Law in New York City, to New York’s taxation of all his income earned working for the law school for tax years 2019 and 2020.

Zelinsky typically worked three days a week on campus and performed the rest of his work at his residence in Connecticut. He and his spouse had sought tax refunds for withholding attributable to his income earned while working remotely from his residence in Connecticut after then-New York Governor Andrew Cuomo issued an executive order directing nonessential businesses to implement remote work. Zelinsky alleged that the work-from-home mandate altered the application of the convenience of the employer rule, as established in a 2003 case that he also brought (Zelinsky I). He argued that the tax tribunal irrationally determined that the employee’s work from home was not due to the strict necessity of the employer.

Application of the Convenience of the Employer Rule

Under 20 NYCRR 132.18(a), when a nonresident employee performs services both within and outside New York, out-of-state workdays are treated as in-state workdays unless the remote work was undertaken due to the employer’s “absolute necessity”— not the employee’s convenience. The court stated that the “convenience rule aims to prevent nonresident employees from receiving tax advantages that are unavailable to similarly situated New York residents merely by choosing to perform work remotely outside the state.”

While acknowledging that the pandemic and work-from-home mandate disrupted the traditional application of the convenience rule, the court ruled that the test still turns on “the distinction between work that must be performed at a particular site for the employer’s need or benefit and work that could be performed anywhere.” (Emphasis added). The appellate court held that while Zelinsky could not work on campus in New York, the school did not require him to work in Connecticut. The school was “indifferent” to where faculty delivered videoconference lectures or conducted remote meetings, and thus the employer gained no advantage from Zelinsky performing those job duties in another state.

Constitutional Claims Rejected

The appellate court also denied Zelinsky’s claims that the taxation violated the dormant Commerce and Due Process clauses of the U.S. Constitution. The court held that the dormant Commerce Clause, a doctrine inferred from the Constitution that prohibits states from passing laws that discriminate against or excessively burden interstate commerce, failed because “nonresidents do not implicate themselves or their employers in interstate commerce merely by working from home.” While the pandemic forced Cardozo to implement remote work to protect employee and student health, it “did not establish the requisite nexus to Connecticut or any other state by doing so.”

On the due process claim, the court found Zelinsky maintained sufficient minimum connections to New York through his continued employment, professional affiliation, and the tangible and intangible benefits of his position at a New York institution.

Key Takeaways

The decision emphasized that the critical difference for employers’ necessity under New York’s convenience of the employer rule is whether the employee is required to work remotely or required to work out of state. The narrow exception applies only where the employer derives a specific business advantage from the employee’s out-of-state presence—such as proximity to a client site or specialized equipment unavailable in New York.

The government-mandated closure of a New York employer did not automatically create an employer necessity. Although the petitioner in this case was forced to work remotely, the court found that he voluntarily chose to work from an out-of-state location and thus could not claim tax refunds, even if that choice was rational because it was where he normally performed remote work. That choice was not altered by the governor’s work-from-home mandate, as it did not require employees to travel to other states.

Employers with remote or hybrid workforces that span state lines may want to review their tax withholding practices and ensure that their allocation methodologies remain consistent with New York’s convenience-of-the-employer framework as interpreted and applied in this decision.

Ogletree Deakins’ Employment Tax Practice Group and Multistate Advice and Counseling Practice Group will continue to monitor developments and will provide updates on the Connecticut, Employment Tax, Higher Education, Multistate Compliance, New Jersey, New York, and Return to Work blogs as additional information becomes available.

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