Telecommuters May Face New Taxes – Supreme Court Lets Stand Ruling That Subjects Employee in Tennessee to New York Income Tax

A move by the Supreme Court means that many telecommuters could ultimately face higher income-tax bills.

The nation’s highest court yesterday declined to hear an appeal by a Tennessee man who telecommuted to New York and was charged by that state for taxes on all his income. Because the Supreme Court won’t review his appeal, New York’s decision stands.

Many telecommuters could face higher state income-tax bills if other states are emboldened by New York’s success and enact similar rules that tax out-of-state telecommuters. Some members of Congress already have introduced legislation to protect telecommuters from such taxes.

Some 9.9 million people work at home full- or part-time for employers other than themselves, according to the Telework Advisory Group at WorldatWork, an association for human-resources professionals. As telecommuting has become increasingly popular in recent years — and as higher gas prices make commuting even more expensive — millions of people are working in one state for employers in other states. Tax issues may arise over which state or states can tax a worker’s income.

By TOM HERMAN and RACHEL EMMA SILVERMAN
Staff Reporters of THE WALL STREET JOURNAL

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