[mdovell]

https://www.bloomberg.com/news/artic...-home-tax-case

This is interesting and has ramifications nationwide.

Basically some out of state employees were working in Mass and living in other states (CT included).
NH said that they don't need to be taxed on the income tax.
CT taxes non residents that work from home but only if their states also do.
Technically the CT policy then mirrors Mass but NY doesn't have a policy
CT has filed backing NH saying they are losing money to NY

Maybe it's me but I thought some of this would be the opposite. Say people that work in Manhattan and live in FFC.

[Stepfordct]

Originally Posted by mdovell

https://www.bloomberg.com/news/artic...-home-tax-case

This is interesting and has ramifications nationwide.

Basically some out of state employees were working in Mass and living in other states (CT included).
NH said that they don't need to be taxed on the income tax.
CT taxes non residents that work from home but only if their states also do.
Technically the CT policy then mirrors Mass but NY doesn't have a policy
CT has filed backing NH saying they are losing money to NY

Maybe it's me but I thought some of this would be the opposite. Say people that work in Manhattan and live in FFC.

States like NY, California are especially tough on collecting income tax on what they seem residents.
If you move out of those states, living more than 183 days in another state. Not even working for a company in that state.
They will play dumb and still try to tax you.
You literally have to break most every connection to said states to escape.
They are broke and need the money

[Lincolnian]

Originally Posted by mdovell

https://www.bloomberg.com/news/artic...-home-tax-case

This is interesting and has ramifications nationwide.

Basically some out of state employees were working in Mass and living in other states (CT included).
NH said that they don't need to be taxed on the income tax.
CT taxes non residents that work from home but only if their states also do.
Technically the CT policy then mirrors Mass but NY doesn't have a policy
CT has filed backing NH saying they are losing money to NY

Maybe it's me but I thought some of this would be the opposite. Say people that work in Manhattan and live in FFC.

As of 2019 CT has a convenience tax for remote workers. Letting the employee work from a remote location is for their convenience not an essential need. If the employee's home office is in CT, and the employee being situated out of state is not an essential need of the employer (remote business office, no employees available in CT who could do those functions, etc.) then CT collects the full tax on the employee even if they live in NH and never step foot in CT. CT is only one of 5 states or so that passed this legislation.

[rwy36]

Originally Posted by Lincolnian

As of 2019 CT has a convenience tax for remote workers. Letting the employee work from a remote location is for their convenience not an essential need. If the employee's home office is in CT, and the employee being situated out of state is not an essential need of the employer (remote business office, no employees available in CT who could do those functions, etc.) then CT collects the full tax on the employee even if they live in NH and never step foot in CT. CT is only one of 5 states or so that passed this legislation.

Thanks for the insight Lincolnian! This seems to be another example of CT getting very creative in pursuing individual taxpayers outside of it's jurisdiction by leveraging the employer's presence within the jurisdiction. The implied message is that the company is somehow 'robbing' CT of it's 'rightful due' by employing qualified people in other states (or allowing them to relocate there which at least sounds like a 'convenience'). I'm not sure I understand how the employee becomes liable though - maybe we'll see a Federal case on the jurisdiction question.

The 'convenience tax' seems similar to the recent discussion around 'state surcharges' on 'mansions' above $400K in CT. The reasoning behind attaching the new state tax to the property (and not the individual) is that the house can't leave Connecticut (so it becomes durable revenue for the gov't money junkies). I'm wondering if CT might also attempt to enjoin employers who decide to relocate to a different state since they are (conveniently) choosing to rob the State of its rightful tax revenue simply due to the business' arbitrary relocation choice! That is a bit of a stretch but crazier things have happened!!

Another unrelated example of CT's 24/7 innovation around tax collection is the Supreme Court decision from a couple of years ago that forces a resident moving out of Connecticut to pay state income taxes on unrealized vested employee stock plan gains. So - if you have equity vested in an employer stock plan but haven't 'cashed out' at the time you move out of CT you still owe CT income tax on those unrealized gains (at the time of the move and not at the time of sale also). Whether the power of the state (and the taxpayers deep pockets) are used to pursue you past the 'move date' for the unvested portion remains to be seen, but the earlier comment about 'completely severing ties' when moving out of CT is a point well-taken given the court's decision in this case.

[rwy36]

Originally Posted by Lincolnian

As of 2019 CT has a convenience tax for remote workers. Letting the employee work from a remote location is for their convenience not an essential need. If the employee's home office is in CT, and the employee being situated out of state is not an essential need of the employer (remote business office, no employees available in CT who could do those functions, etc.) then CT collects the full tax on the employee even if they live in NH and never step foot in CT. CT is only one of 5 states or so that passed this legislation.

Here's a link to some of the "Convenience Rule' details: https://www.cga.ct.gov/2021/rpt/pdf/2021-R-0008.pdf

[JayCT]

Originally Posted by rwy36

Thanks for the insight Lincolnian! This seems to be another example of CT getting very creative in pursuing individual taxpayers outside of it's jurisdiction by leveraging the employer's presence within the jurisdiction. The implied message is that the company is somehow 'robbing' CT of it's 'rightful due' by employing qualified people in other states (or allowing them to relocate there which at least sounds like a 'convenience'). I'm not sure I understand how the employee becomes liable though - maybe we'll see a Federal case on the jurisdiction question.

The 'convenience tax' seems similar to the recent discussion around 'state surcharges' on 'mansions' above $400K in CT. The reasoning behind attaching the new state tax to the property (and not the individual) is that the house can't leave Connecticut (so it becomes durable revenue for the gov't money junkies). I'm wondering if CT might also attempt to enjoin employers who decide to relocate to a different state since they are (conveniently) choosing to rob the State of its rightful tax revenue simply due to the business' arbitrary relocation choice! That is a bit of a stretch but crazier things have happened!!

Another unrelated example of CT's 24/7 innovation around tax collection is the Supreme Court decision from a couple of years ago that forces a resident moving out of Connecticut to pay state income taxes on unrealized vested employee stock plan gains. So - if you have equity vested in an employer stock plan but haven't 'cashed out' at the time you move out of CT you still owe CT income tax on those unrealized gains (at the time of the move and not at the time of sale also). Whether the power of the state (and the taxpayers deep pockets) are used to pursue you past the 'move date' for the unvested portion remains to be seen, but the earlier comment about 'completely severing ties' when moving out of CT is a point well-taken given the court's decision in this case.

Before being so critical of our state you should know this rule only applies if the employees state has a similar rule. As the link provided by you notes, only five states have this rule. Seems reasonable to me. Why shouldn’t it go both ways? Jay