Subject to income tax on a state level

December 27, 2005 9:47 AM

Am I subject to penalties and fines if I'm not in compliance with New York State tax law, even though I do not work or live in New York State?
posted by brent to Law & Government (12 answers total)

Can you clarify the question a little? I can think of a couple of reasons you might be subject to NY state tax laws -- for example if you used to work or live there and owe back taxes from that period. Or if you currently own property there even if it isn't your primary residence.
posted by selfmedicating at 9:54 AM on December 27, 2005

I don't understand what you're asking - is there a "more inside" missing? Because the question, as asked, sounds equivalent to "Am I subject to penalties if I am not in compliance with Iceland tax law, even though I do not work or live in Iceland?".
posted by nkyad at 9:54 AM on December 27, 2005

If this is relating to telecommuting, the answer is yes, you have to pay taxes and the like.
posted by Remy at 10:19 AM on December 27, 2005

It isn't necessary to live or work in New York to run afoul of New York laws. New York’s long-arm statute confers jurisdiction over a defendant who, in person or through an agent, "transacts any business within the state or contracts anywhere to supply goods or services in the state." N.Y.C.P.L.R. § 302(a)(1). A single transaction in the state is sufficient to invoke jurisdiction.
posted by RichardP at 10:32 AM on December 27, 2005

Would this even apply to someone not in the United States?
posted by wackybrit at 10:46 AM on December 27, 2005

It reminds me of that old Monty Python bit where the solution to their budget problems is to tax all foreigners living abroad.

Seriously though, if you have NY state income you probably owe them tax. Working there certainly qualifies, even if for a short period like a week. Other situations can also qualify. It would be helpful if you filled in the details.
posted by caddis at 10:52 AM on December 27, 2005

If this is relating to telecommuting, the answer is yes, you have to pay taxes and the like.

That ruling in that article seems pretty harsh. As I recall it, when I lived in the area, New York State had a provision that allowed for days worked outside of NY (I think, primarily for CT and NJ commuters), but the linked article seems to indicate that this doesn't apply anymore. Ouch. That said, it's not as terrible as it sounds, because the NY 1040 form does take into account credit for state taxes paid to other jurisdictons. If you're living in a non-income tax state, and assumed you could skate on paying NY state tax altogether, you could be in for an unpleasant surprise indeed.

I am a member in an LLC that is headquartered in IL and does some business in NY. As a result, I have to pay IL and NY State taxes even though I work and live in CT. Not an entirely pleasant situation, but it's not financially ruinous, as the amount of state tax I pay to NY, IL and CT combined is only marginally more than I would pay to CT if all of my income were generated here.
posted by Tommy Gnosis at 11:04 AM on December 27, 2005

Would this even apply to someone not in the United States?

With regards to federal taxes, the IRS has a FAQ for Aliens and U.S. Citizens Living Abroad. The rules are kind of complicated, but roughly, if you're a U.S. citizen who has been a resident of a foreign country for a year then you can exclude any foreign earned income when computing the taxes one owes to the IRS.

With regards to general torts, if a resident, of say Norway, transacted business with a resident of New York it is possible for a New Yorker to sue the Norwegian and previal in a New York court. However, the court of New York lacks the ability to enforce a civil judgement in Norway. The New Yorker could ask the court to place a lien on the Norwegian's assets, but if the Norwegian had no assets in New York and didn't care about the ability to obtain credit in the U.S. this would have little practical effect.
posted by RichardP at 11:20 AM on December 27, 2005

Response by poster: At work, we are being asked to

"Important Note: This certification is required even if you do not expect to spend any time working in NYS during the year. If this is the case, simply certify “14 or fewer days on the NYS certification page"

I think this is a against the law, and if not an unconstitutional reach of one state against citizens residing elsewhere.

Sure one person may be able to give an estimate on the hours worked in one state, say a banker, working at HQ in NYC, and then returning to a different state where a branch may be. What I question is the remaining 48, barring the one state you do pay state income taxes.

This request seems to say, "I'm to find out how many work days I will have in say Missouri, Alaska, South Dakota, Idaho, and fill in similar certification requests, and complete all 50 states state estimates."

I understand parts where if income is derived in a state, ie: professional athletes, artists and performance, and in part if military personnel are deployed, even if residency is one state say without income taxes, while being stationed at a base which does have income taxes and all, but not having that lifestyle why come after me.

I've done some preliminary tax law research about the subject, but can't seem to find what penalties exist.
posted by brent at 12:30 PM on December 27, 2005

From what limited info we have, that certification would seem to be more for the convenience of your employer than for NY State, even if it might be an official NYS document. If you truly have no links to NYS then you have to file nothing with them, but links might be something like you filed there last year. If you worked in Idaho, I doubt you would be looking at this. Your employer probably has many employees that owe some NYS tax, and it may not be clear to the payroll department whether that includes you.
posted by caddis at 1:31 PM on December 27, 2005

caddis's idea sounds reasonable. Maybe it's CYA for the employer -- could be that NYS demands that anyone who works, say, 15 or more days in the state must pay some tax there. This is so your employer can say, "Oh, ok, Brent didn't work in NY last year, don't bother sending him the forms for there." And then if NY's revenue dept. wants to know why the employer didn't submit any tax info for you, they can show them the form that says you haven't done anything there.
posted by SuperNova at 3:58 PM on December 27, 2005

I think this is a against the law, and if not an unconstitutional reach of one state against citizens residing elsewhere.

Brent, you're being asked to fill out a form. Why would that be against the law?

Yes, it's a small amount of extra work that your employer has decided it wants you to do. And yes, IF all states with income taxes were to ask your employer to have you fill out such a form, it would even be more of a hassle. But that's a hypothetical. And it is likely to remain a hypothetical, since it costs a state real money to do data entry and file each form it receives.

Slightly off-point factoid: states and cities with income tax DO collect money from professional athletes and performing artists who are playing in their state/locale.
posted by WestCoaster at 11:57 AM on December 29, 2005