Source: U.S. Supreme Court
The ongoing litigation in Zelinsky v. Commissioner of Taxation and Finance of the State of New York offers tax practitioners a timely reminder that remote work taxation issues born during the COVID-19 pandemic continue to generate controversy, compliance headaches, and planning opportunities for clients. As Edward Zelinsky, a law professor at Cardozo School of Law, continues his challenge against New York's taxation of wages he earned while working remotely from his Connecticut home during pandemic shutdowns, practitioners should recognize this case as a signal to review their client portfolios for similar exposure and untapped advisory opportunities.
The case centers on New York's convenience of the employer rule, which allows the state to tax nonresident employees' income even when work is performed outside New York if the remote arrangement exists for the employee's convenience rather than the employer's necessity. Zelinsky argues that New York's pandemic shutdown order created an employer necessity that should exempt his Connecticut-based work from New York taxation. The Tax Appeals Tribunal disagreed, and the litigation continues.
This distinction between convenience and necessity becomes particularly murky in the post-pandemic landscape. Many employees who began working remotely during mandatory shutdowns have continued those arrangements long after restrictions lifted, often without clear documentation of whether the remote work serves employer necessity or employee preference. New York isn't alone in applying convenience rules—Connecticut, Delaware, Nebraska, and Pennsylvania maintain similar provisions, creating a patchwork of competing tax claims on the same income.
Your existing client base likely includes numerous individuals and businesses facing these issues, even if they haven't recognized the problem. Start by reviewing individual returns for clients who live in one state while working for employers headquartered in states with convenience rules. Look for clients who changed work arrangements during 2020 or 2021 and never reverted to their previous patterns. An individual who moved to Florida while continuing to work for a New York employer may have ongoing New York tax obligations despite Florida's lack of income tax.
Small business clients present different opportunities. Any business with employees working remotely from states where the company lacks physical presence potentially faces nexus issues, withholding obligations, and unemployment insurance requirements in those states. Many businesses accommodated remote work during the pandemic without considering the tax and compliance implications, and years later, still haven't addressed these issues formally.
Practitioners can provide immediate value by analyzing whether clients have proper documentation supporting necessity-based remote work arrangements. Written policies, emails confirming remote work requirements, and evidence of office closures all support a necessity argument should clients face audits. For business clients, systematic reviews of where employees actually work can identify withholding obligations, nexus concerns, and registration requirements that have been overlooked.
Regardless of how the Zelinsky case ultimately resolves, the underlying issues aren't disappearing. Remote work has become permanent for many workers, and states show no inclination to abandon revenue claims on that income. Practitioners who position themselves as experts in multi-state remote work taxation can differentiate their practices and capture advisory work that many clients don't realize they need. The question is whether you'll identify and address these situations proactively or wait until the state sends a notice demanding payment for years of unreported obligations.
Christine Gervais is a licensed CPA, using her skills to help businesses grow and achieve their fullest potential. Christine has a Master’s degree in accounting from Southern New Hampshire University in addition to holding her CPA license for over a decade. Notably, Christine is a nationally recognized speaker providing education to other CPAs on how to best serve clients as well as instruction on a wide variety of topics for business owners on how to maximize success. Christine prides herself on the value she can bring to clients with her extensive tax knowledge and provides strategic, forward-thinking financial strategies to help clients grow. When not behind her desk, you can find Christine spending quality time with her daughter and stepson or tending to the family’s excessively loved farm animals.
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