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December 11, 2023

New York ALJ rules state's convenience of the employer rule applies to work from home days during the COVID-19 Pandemic

In Matter of Zelinsky,1 an Administrative Law Judge (ALJ) for the New York Division of Tax Appeals ruled that a nonresident's wages from his New York employer earned while he worked remotely during the COVID-19 pandemic were properly allocated to New York State (NYS) under the state's "convenience of the employer" rule. The ALJ also found the taxpayer had a virtual presence in NYS when hosting classes and meeting with students using a web conferencing platform.

NYS convenience of the employer rule

NYS imposes a tax on nonresidents for income "derived from sources in" NYS,2 including income from a "business, trade, profession or occupation carried on" in NYS.3 For nonresident employees who perform services both in and outside of NYS, the income derived from NYS sources is determined by the proportion of days worked in NYS versus days worked everywhere else.4 Notably, however, under NYS's convenience of the employer rule,5 taxes related to work-from-home days for nonresident employees assigned to work in NYS are typically allocated to NYS, regardless of where the employee lives.6 The relevant regulation states that "any allowance claimed [by nonresidents of [NYS] for days worked outside [NYS] must be based upon the performance of services which of necessity, as distinguished from convenience, obligate the employee to out-of-state duties in the services of his employer."7 In other words, while tax is generally allocated to NYS based on the number of days physically worked in the state, the convenience of the employer rule permits NYS to additionally tax remote work days of nonresidents if they fall within the guidelines.

Edward Zelinsky is an out-of-state resident who is a professor at a New York law school. In 2003, Mr. Zelinsky lost a constitutional challenge to NYS's convenience of the employer rule for taxation of his wages from his NYS employer for years 1994 and 1995.8

Convenience of the employer rule during and after the COVID-19 pandemic

In mid-March 2020, and for a number of months thereafter, NYS closed nonessential businesses due to the COVID-19 pandemic.9 There was some uncertainty as to whether employees working from home due to government mandates would be taxed under the convenience of the employer rule. In an October 2020 update, the New York Department of Taxation and Finance (Department) stated that "if you are a nonresident whose primary office is in [NYS], your days telecommuting during the pandemic are considered days worked in [NYS] unless your employer has established a bona fide employer office at your telecommuting location."10

Mr. Zelinsky again challenged the taxation of wages from his NYS employer for 2019 and 2020 that were allocated and taxed by NYS under the convenience of the employer rule. Mr. Zelinsky contended that the COVID-19 pandemic provided a factual basis to at least modify previous NYS rulings on the rule. Specifically, Mr. Zelinsky argued that the Department did not "properly apportion his income between the states in which he worked, constituting extraterritorial taxation of a nonresident in violation of the Due Process and Commerce Clauses … " In this ruling, the ALJ disagreed, finding Mr. Zelinsky failed to prove that the Department's allocation of income violated the Due Process and dormant Commerce Clause. In so holding, the ALJ explained that because Mr. Zelinsky's work situation in 2019 was the same as in tax years 1994 and 1995 (the years at issue in the 2003 case), the holding in the 2003 case is binding precedent and applicable to the tax years at issue in the present case, 2019 and 2020.

The ALJ also found the fact that the law school allowed Mr. Zelinsky to work remotely, instead of providing accommodations, did not constitute a "necessity" of his employer. Nor was the work performed by Mr. Zelinsky at his out-of-state home "so specialized" that it had to be done out of NYS by necessity of his employer. The ALJ noted that a government order "mandating that all employees work from home due to a worldwide pandemic cannot result in special tax benefits to those who do not live in [NYS], but … work for, and benefit from, a New York employer."

More interestingly, the ALJ also found that Mr. Zelinsky had a virtual presence in NYS when hosting classes and meeting with students via a web conferencing platform.11 The ALJ reasoned that the taxpayer was able to earn income from the law school during the pandemic because he was able to perform his duties virtually.


It is unknown whether Mr. Zelinsky will appeal this decision to the New York Court of Appeals, which issued the 2003 decision that remains precedent. In addition, the US Supreme Court has declined to hear prior cases dealing with state convenience of the employer laws.


Contact Information
For additional information concerning this Alert, please contact:
For New York state income tax:
   • Yud Harrindranauth (
   • Steven Colby (
For payroll and employment tax:
   • Kristie Lowery (
   • Kenneth Hausser (
   • Debera Salam (

Published by NTD’s Tax Technical Knowledge Services group; Andrea Ben-Yosef, legal editor


1 Matter of Zelinsky, DTA Nos. 830517 and 830681 (NYS Div. of Tax App. Nov. 30, 2023).

2 NY Tax Law Section 601(e)(1).

3 NY Tax Law Section 601(b)(1)(B).

4 20 NYCRR Section 132.18(a).

5 20 NYCRR Section 132.18(a). There is a narrow exception to the "convenience of the employer rule" for those employees with a "bona fide employer [home] office." TSB-M-06(5)I.

6 20 NYCRR Section 132.18(a).

7 Id. (emphasis added).

8 Zelinsky v. Tax Appeals Trib., 1 N.Y.3d 85 (2003).

9 "Governor Cuomo Issues Guidance on Essential Services Under The 'New York State on PAUSE' Executive Order," New York State website (issued March 7, 2020) .

10 Frequently Asked Questions about Filing Requirements, Residency, and Telecommuting for NYS Personal Income Tax, NYS Department of Taxation and Finance website.

11 The ALJ, citing South Dakota v. Wayfair, 138 S Ct 2080 (2018), said that "[i]n this modern economy with its internet technology, one can be present in a state without needing to physically be there."