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The New York State Department of Taxation and Finance has finally issued guidance related to its application of the convenience of the employer test during the Covid-19 pandemic. In its Frequently Asked Questions, the Department applies current policy and concludes that New York-based employees teleworking outside the state due to the Covid-19 pandemic must continue to source their income to the state under the “convenience of the employer” test, unless the narrow “bona fide employer office” exception applies. New York has long-adopted the convenience of the employer test, which deems a nonresident who teleworks outside the state to be working at its employer’s New York location (and, hence, such wages would be New York-sourced), unless the nonresident teleworks out of necessity for the employer and not just for the employee’s convenience. Not unexpectedly, the Department’s FAQs indicate that teleworking due to the pandemic is not out of necessity for the employer. However, the Department does not provide any insight into its determination.
Individual taxpayers have frequently challenged New York’s convenience of the employer test over the years, but not in the context of a global pandemic. Over those decades since the convenience of the employer test was first adopted in 1960, the New York Court of Appeals has sustained the Department’s test despite several challenges based on the Commerce, Due Process, and Equal Protection Clauses of the U.S. Constitution. The “bona fide employer office” exception to the test is impossibly narrow and infrequently met, but may be ripe for a challenge given the circumstances of Covid-19 and the significant change in facts resulting from the pandemic’s mandatory remote work orders.
More generally, sourcing employee wages due to the various mandatory remote work orders have caused a rift among the states. While New York’s convenience of the employer test is controversial, other states have adopted similar policies during the Covid-19 period. Most notably, a Massachusetts regulation effectively adopts a temporary convenience of the employer test during the pandemic period. This policy has a distinctly adverse impact on New Hampshire residents, as New Hampshire does not impose an income tax on wages. As a result, New Hampshire recently filed a complaint to the United States Supreme Court requesting that the Court permanently enjoin Massachusetts from enforcing the regulation. In that complaint, New Hampshire argues that the Massachusetts regulation is “a direct attack on a defining feature of the State of New Hampshire’s sovereignty.”
 E.g., Huckaby, supra, at n. 36; Zelinsky v. New York State Tax Appeals Tribunal, 1 NY3d 85, 801 NE2d 840, 769 NYS2d 464 (2003), cert. denied, 541 US 1009, 124 S. Ct. 2068 (2004).
 ESUS discusses New York’s and other states’ convenience of the employer tests, here and here.
 ESUS discusses the Massachusetts regulation and related federal legislation, here.
 The New Hampshire complaint is available, here.