COVID-19: NY State Senate bill would treat income earned working from home outside NY as exempt

New York Senate bill S.8386, introduced on May 21, 2020, would provide relief to businesses whose employees are working from home outside of New York State due to COVID-19 by confirming that such telework is due to the necessity of the employer and not the convenience of the employee and is exempt from New York income tax and income tax withholding.

The bill would apply only for the period that employers mandated employees work from home pursuant to the emergency declaration in New York Executive Order 202. Should the bill become law, it would be effective immediately but would apply only to the time covered by the executive order, which is currently March 7, 2020 through September 7, 2020.

Under New York’s convenience-of-the-employer rule, the employer is required to withhold New York state income tax from all wages paid to the employee if (1) the employee spent at least one day in the year in New York and (2) the reason the employee is working from home outside of the state is for the employee’s own convenience. If the reason the employee is working from home is for the convenience of the employer, work from home is excluded from the nonresident income tax withholding requirement. (TSB-M-06(5) I.)

Thus far, the New York Department of Tax and Finance has not issued guidance pursuant to COVID-19 and the so-called “convenience-of-the-employer rule,” leaving businesses with uncertainty as to how the Department would rule on the matter should employers reach the conclusion that income employees earn working from home outside of New York during the COVID-19 emergency is exempt from New York income tax and income tax withholding.

 

ABOUT CAROPRESE & COMPANY

Caroprese & Company is a certified public accounting firm that provides innovative and strategic services to a diverse client base of individuals, families, small and medium size businesses, government entities, non-profits and multi-national corporations. Our dynamic professionals perform at a high intensity and are laser focused on providing excellence to our global clientele.

 

CONTACTING CAROPRESE & COMPANY

This publication is provided by Caroprese & Company as a service to its clients and colleagues.  The information and content included in this publication should not be construed as technical advice.  Questions regarding any matters discussed in this publication should be directed to Brandon Caroprese whose contact information is listed below:

Brandon Caroprese, CPA, MST
Tel. (973)-475-8090
Email. bcaroprese@caroprese.co

Share this article:

The Information contained in the Caroprese & Company (“Caroprese”) website is for general guidance on matters of interest only. The application and impact of laws can vary widely based on the specific facts involved. Given the changing nature of laws, rules and regulations, and the inherent hazards of electronic communication, there may be delays, omissions or inaccuracies in Information contained in the Caroprese website. Accordingly, the Information on the Caroprese website is provided with the understanding that the authors and publishers are not herein engaged in rendering legal, accounting, tax, or other professional advice and services. As such, it should not be used as a substitute for consultation with professional accounting, tax, legal or other competent advisors. Before making any decision or taking any action, you should consult a Caroprese professional.