HARTFORD, Conn. (AP) — Telecommuting, a pandemic-era novelty that has become a permanent alternative for many people, has some Connecticut and New Jersey employees of New York-based companies questioning why they still have to pay personal income tax to the Empire State.
Their home states are wondering as well.
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HARTFORD, Conn. (AP) — Telecommuting, a pandemic-era novelty that has become a permanent alternative for many people, has some Connecticut and New Jersey employees of New York-based companies questioning why they still have to pay personal income tax to the Empire State.
FILE - A subway approaches an above ground station in the Brooklyn borough of New York with the New York City skyline in the background, June 21, 2017. New Jersey is incentivizing taxpayers who work from home for New York based employers to sue New York in court for taxing their wages. (AP Photo/Bebeto Matthews, File)
FILE - People wait to drive through the Holland Tunnel into New York City during morning rush hour traffic in Jersey City, New Jersey, on Wednesday, March 8, 2023. New Jersey is incentivizing taxpayers who work from home for New York based employers to sue New York in court for taxing their wages. (AP Photo/Ted Shaffrey, File)
Former New Jersey State Senator Steve Oroho poses for a portrait on Friday, March 22, 2024, in Jersey City, N.J. roho pushed as a legislator to address the issue of New Jersey taxpayers being taxed by New York. He said he's skeptical of New Jersey's commitment to the effort, which puts the financial onus of a potentially lengthy and expensive legal challenge on the individual taxpayer. (AP Photo/Peter K. Afriyie)
FILE - Light from the setting sun falls on the Hudson Yards neighborhood in the borough of Manhattan in New York City, as seen from the Weehawken Pier in Weehawken, New Jersey, on Wednesday, March 22, 2023. New Jersey is incentivizing taxpayers who work from home for New York based employers to sue New York in court for taxing their wages. (AP Photo/Ted Shaffrey, File)
Fed up with losing out on hundreds of millions of dollars in tax revenue each year, New Jersey is now offering a state tax credit to residents who work from home and successfully appeal their New York tax assessment. Connecticut is considering a similar measure.
The Garden State's bounty — a rebate worth roughly half a person's refund of income taxes they paid to New York for the 2020-2023 period — has been claimed so far by one winning litigant since the state made the offer in July, according to the state’s Division of Taxation. That taxpayer received a $7,797.02 refund for their efforts. Officials hope that person's windfall will encourage others to follow suit.
Another New Jersey resident who is taking up the state's offer is Open Weaver Banks, a tax attorney who prefers working from home to braving an "awful" commute into the Big Apple. She's also filed one of a growing number of similar challenges.
“The process of doing the refund and the appeal isn’t all that intimidating to me,” said Banks, a tax partner at Hodgson Russ LLP. “I'm on New Jersey's team here. I would like to see more residents doing this. I think they have a really fair point."
New York requires out-of-state commuters who work for New York-based companies to pay New York income taxes, even if they’ve stopped physically going in to the office most days a week, unless they can satisfy very strict requirements for what constitutes a bona fide home office.
A home office near a specialized track to test new cars, for example, might qualify if it couldn’t be replicated in New York. But a worker with specialized scientific equipment set up in their home that could be duplicated over the border would still have to pay, according to a memorandum from the New York State Department of Taxation.
When the nature of work was upended in 2020, New York should have “softened” these requirements, Banks said. “And they didn’t. They are just standing by and fighting the claims."
Both neighboring states have implemented “retaliatory” tax rules that affect New Yorkers who work remotely for Connecticut or New Jersey-based companies, but these workforces are far smaller and their overall tax payments don't make up the difference.
Out-of-state taxpayers paid New York nearly $8.8 billion in 2021 in taxes, roughly 15% of the state’s total income tax revenues, according to the Citizens Budget Commission in New York. Of that, $4.3 billion came from New Jersey taxpayers and $1.5 billion from Connecticut taxpayers.
It’s unclear how much of that was earned at home. But out-of-state employees of New York-based companies who work remotely are increasingly appealing their tax bills, Amanda Hiller, the acting commissioner and general counsel for the New York Department of Taxation and Finance, told state legislators recently.
Hiller acknowledged that New York’s decades-old policy, known as a “convenience of the employer rule,” has created a financial burden for New Jersey and Connecticut, which provide tax credits to their residents for the income taxes they’ve paid New York so they are not double-taxed.
New Jersey's Division of Taxation said the state's long-term goal is to have New York's rule overturned entirely, something that will likely require a taxpayer's legal challenge to succeed before the U.S. Supreme Court. That could be a tall order: New Hampshire tried to sue Massachusetts for temporarily collecting income tax from roughly 80,000 of its residents who worked from home during the pandemic, and the Supreme Court rejected the complaint without comment.
Officials in New Jersey estimate it could reap as much as $1.2 billion annually if residents working from home for New York companies are taxed at home. Connecticut could recoup about $200 million, its officials say.
Connecticut Gov. Ned Lamont has proposed an initiative similar to New Jersey's that needs final legislative approval. It's unclear, however, whether it can pass before the session ends May 8.
“We think it’s an unconstitutional overreach by the state of New York,” Jeffrey Beckham, secretary of Connecticut’s state budget office, said recently. “We think our residents should be paying tax to us and they’d be paying at a lower rate.”
Indeed, the top marginal state income tax rate, as of Jan. 1, for individuals in New York is 10.90%. Connecticut’s top rate is 6.99% and New Jersey’s is 10.75%, according to the Tax Foundation.
“An awful lot of people are hurt by these laws,” said Edward Zelinsky, a Connecticut resident, tax law expert and professor at Yeshiva University’s Cardozo School of Law in New York City. “While New York and other states like to pretend that these are wealthy people, the people who are most hurt by this rule are often people of modest income, middle income, people who can’t afford lawyers.”
Zelinksy has been trying, so far without success, to challenge New York’s tax rule for about 20 years, including a pending case over the income he earned working from home while his school was closed due to COVID-19 restrictions.
A small number of states, including Arkansas, Delaware, Nebraska and Pennsylvania, have tax rules similar to New York's. New Jersey and Pennsylvania have a reciprocal income tax agreement.
Andrew Sidamon-Eristoff, who is in the unique position of being the former New Jersey state treasurer and a former New York commissioner of taxation and finance, believes eventually the right litigant will “get it before the right court to challenge it.”
But former New Jersey state Sen. Steven Oroho, an accountant who commuted for nearly two decades into New York City and who pushed as a legislator to address the inequity, said he’s skeptical of New Jersey's commitment to the effort, which puts the financial onus of a potentially lengthy and expensive legal challenge on the individual taxpayer.
“New York is very, very aggressive and unfortunately, in my view,” said Oroho. “New Jersey has been extremely passive.”
Associated Press Writer Mike Catalini in Trenton, N.J. contributed to this story.
Former New Jersey State Senator Steve Oroho poses for a portrait on Friday, March 22, 2024, in Jersey City, N.J. roho pushed as a legislator to address the issue of New Jersey taxpayers being taxed by New York. He said he's skeptical of New Jersey's commitment to the effort, which puts the financial onus of a potentially lengthy and expensive legal challenge on the individual taxpayer. (AP Photo/Peter K. Afriyie)
FILE - A subway approaches an above ground station in the Brooklyn borough of New York with the New York City skyline in the background, June 21, 2017. New Jersey is incentivizing taxpayers who work from home for New York based employers to sue New York in court for taxing their wages. (AP Photo/Bebeto Matthews, File)
FILE - People wait to drive through the Holland Tunnel into New York City during morning rush hour traffic in Jersey City, New Jersey, on Wednesday, March 8, 2023. New Jersey is incentivizing taxpayers who work from home for New York based employers to sue New York in court for taxing their wages. (AP Photo/Ted Shaffrey, File)
Former New Jersey State Senator Steve Oroho poses for a portrait on Friday, March 22, 2024, in Jersey City, N.J. roho pushed as a legislator to address the issue of New Jersey taxpayers being taxed by New York. He said he's skeptical of New Jersey's commitment to the effort, which puts the financial onus of a potentially lengthy and expensive legal challenge on the individual taxpayer. (AP Photo/Peter K. Afriyie)
FILE - Light from the setting sun falls on the Hudson Yards neighborhood in the borough of Manhattan in New York City, as seen from the Weehawken Pier in Weehawken, New Jersey, on Wednesday, March 22, 2023. New Jersey is incentivizing taxpayers who work from home for New York based employers to sue New York in court for taxing their wages. (AP Photo/Ted Shaffrey, File)
Students protesting the war in Gaza abandoned their camp at the University of Southern California early Sunday after being surrounded by police and threatened with arrest, while Northeastern University's commencement ended peacefully at Boston's Fenway Park.
Developments in both places were being watched closely following scores of arrests last month — more than 90 people at USC in Los Angeles and about 100 at Northeastern in Boston.
Dozens of Los Angeles Police Department officers arrived about 4 a.m. at USC to assist campus safety officers. The university had warned of arrests on social media and in person. Video showed some protesters packing up and leaving, while officers formed lines to push others away from the camp as it emptied out. The university said there were no reports of any arrests.
USC President Carol Folt said it was time to draw a line because “the occupation was spiraling in a dangerous direction” with areas of campus blocked and people being harassed.
“The operation was peaceful," Folt wrote in an update. “Campus is opening, students are returning to prepare for finals, and commencement set-up is in full swing.”
USC earlier canceled its main graduation ceremony while allowing other commencement activities to continue.
Across town at the University of California, Los Angeles, officials announced the creation of a new chief safety officer position to oversee campus security operations. The announcement Sunday came after UCLA was criticized for its handling of demonstrations that culminated in a mob attack on a pro-Palestinian student encampment last week.
At the Northeastern commencement Sunday, some students waved small Palestinian and Israeli flags, but were outnumbered by those waving the flags of India and the U.S., among others. Undergraduate student speaker Rebecca Bamidele drew brief cheers when she called for peace in Gaza.
The Associated Press has tallied about 2,500 people arrested at about 50 campuses since April 18, based on its reporting and statements from universities and law enforcement.
Arrests continued apace over the weekend. At the University of Virginia, there were 25 arrests Saturday for trespassing after police clashed with protesters who refused to remove tents. At the Art Institute of Chicago campus, police cleared a pro-Palestinian encampment hours after it was set up Saturday and arrested 68 people, saying they would be charged with criminal trespass.
In Charlottesville, Virginia, student demonstrators began their protest on a lawn outside the school chapel Tuesday. Video on Saturday showed police in riot gear and holding shields lined up on campus, while protesters chanted “Free Palestine.”
As police moved in, students were pushed to the ground, pulled by their arms and sprayed with a chemical irritant, Laura Goldblatt, an assistant professor who has been helping the demonstrators, told The Washington Post. The university said protesters were told that tents were banned under school policy and were asked to remove them.
Virginia Attorney General Jason Miyares told Fox News on Sunday the police response was justified because students had been warned repeatedly to leave, were violating the school's conduct code, and that outsiders who were not students provided protesters with supplies like wooden barriers.
"We’ve seen folks that are not students show up in riot gear with bull horns to direct the protesters on how to flank our officers," Miyares said.
He said some had put bear spray into water bottles and thrown them at officers.
It was the latest clash in weeks of protests and tension at U.S. colleges and universities.
Tent encampments of protesters urging universities to stop doing business with Israel or companies they say support the war in Gaza have spread in a student movement unlike any other this century. Some schools reached agreements with protesters to end the demonstrations and reduce the possibility of disrupting final exams and commencements.
The University of Michigan was among the schools that had braced for protests during commencement this weekend, as were Indiana University, Ohio State University and Northeastern. More ceremonies are planned in the coming weeks.
In Ann Arbor, there was a protest at the beginning of the event at Michigan Stadium. About 75 people, many wearing traditional Arabic kaffiyehs along with their graduation caps, marched up the main aisle toward the stage.
They chanted “Regents, regents, you can’t hide! You are funding genocide!” while holding signs, including one that read: “No universities left in Gaza.”
Overhead, planes pulled banners with competing messages. “Divest from Israel now! Free Palestine!” and “We stand with Israel. Jewish lives matter.”
Officials said no one was arrested, and the protest didn’t seriously interrupt the nearly two-hour event, attended by tens of thousands of people, some of them waving Israeli flags.
At Indiana University, protesters urged supporters to wear their kaffiyehs and walk out during remarks by school President Pamela Whitten on Saturday evening. The Bloomington campus designated a protest zone outside Memorial Stadium, where the ceremony was held.
At Princeton University in New Jersey, 18 students began a hunger strike to try to push the university to divest from companies tied to Israel. Students at other colleges, including Brown and Yale, launched similar hunger strikes this year before the more recent wave of demonstrations.
The protests stem from the conflict that started Oct. 7 when Hamas militants attacked southern Israel, killing about 1,200 people, mostly civilians, and taking roughly 250 hostages. Vowing to destroy Hamas, Israel launched an offensive in Gaza that has killed more than 34,500 Palestinians, about two-thirds of them women and children, according to the Health Ministry in the Hamas-ruled territory. Israeli strikes have devastated the enclave and displaced most of its inhabitants.
Perry reported form Meredith, New Hampshire, and Marcelo from New York. Also contributing were Associated Press reporters Christopher Weber in Los Angeles; Denise Lavoie in Richmond, Virginia; Ed White in Detroit, and Adrian Sainz in Memphis, Tennessee.
CORRECTS NAME TO ROUSE DAVIS BOYCE INSTEAD OF CONNOR MOORE - University of Mississippi student and counter-protester Rouse Davis Boyce, center, taunts graduate student Jaylin R. Smith with a piece of bread during a protest in support of Palestinians on Thursday, May 2, 2024, outside the J.D. Williams Library on the school campus in Oxford, Miss. (HG Biggs/The Clarion-Ledger via AP)
A demonstrator stands in front of an encampment set up by pro-Palestinian demonstrators on the campus at the University of Southern California after police arrived with orders to disperse Sunday, May 5, 2024, in Los Angeles. (AP Photo/Ryan Sun)
People carry belongings out of an encampment set up by pro-Palestinian demonstrators after police arrived for a raid on the campus at the University of Southern California Sunday, May 5, 2024, in Los Angeles. (AP Photo/Ryan Sun)
People carry belongings out of an encampment set up by pro-Palestinian demonstrators after police arrived for a raid on the campus at the University of Southern California Sunday, May 5, 2024, in Los Angeles. (AP Photo/Ryan Sun)
A person protests in front of a police officer after police arrived on the campus at the University of Southern California to clear an encampment set up by pro-Palestinian demonstrators Sunday, May 5, 2024, in Los Angeles. (AP Photo/Ryan Sun)
A protestors gestures near police officers after a raid on the pro-Palestinian encampment on the campus at the University of Southern California Sunday, May 5, 2024, in Los Angeles. (AP Photo/Ryan Sun)
Police gather on the campus at the University of Southern California prior to clearing out an encampment set up by pro-Palestinian demonstrators Sunday, May 5, 2024, in Los Angeles. (AP Photo/Ryan Sun)
Pro-Palestinian demonstrators remove belongings from an encampment after police arrived on the campus at the University of Southern California Sunday, May 5, 2024, in Los Angeles. (AP Photo/Ryan Sun)
People stand guard outside an encampment set up by pro-Palestinian demonstrators on the campus at the University of Southern California Saturday, May 4, 2024, in Los Angeles. (AP Photo/Ryan Sun)
Police form a line where pro-Palestinian protesters set up tents on the grounds of the University of Virginia, in Charlottesville, Va., Saturday, May 4, 2024. (Cal Cary/The Daily Progress via AP)
A pro-Palestinian supporter holds a sign reading "State Police=KKK" on the grounds of the University of Virginia, in Charlottesville, Va., where they set up tents, Saturday, May 4, 2024. (Cal Cary/The Daily Progress via AP)
Police use a microphone as a pro-Palestinian demonstrator listens on the grounds of the University of Virginia, in Charlottesville, Va., where tents were set up, Saturday, May 4, 2024. (Cal Cary/The Daily Progress via AP)
A graduate holds his cap with an Israeli flag while shouting at pro-Palestinian protesters as they demonstrate during the University of Michigan's Spring 2024 Commencement Ceremony at Michigan Stadium in Ann Arbor, Mich., Saturday, May 4, 2024. (Katy Kildee/Detroit News via AP)
Rawan Antar, 21, center, chants in support of Palestinians during the University of Michigan's Spring 2024 Commencement Ceremony at Michigan Stadium in Ann Arbor, Mich., on Saturday, May 4, 2024. (Katy Kildee/Detroit News via AP)
Graduates sporting Israeli flags and pins shout at Pro-Palestinian protesters as they demonstrate during the University of Michigan's Spring 2024 Commencement Ceremony at Michigan Stadium in Ann Arbor, Mich., on Saturday, May 4, 2024. (Katy Kildee/Detroit News via AP)
Graduate Ari Belchinsky wears pro-Israel pins during the University of Michigan's Spring 2024 Commencement Ceremony at Michigan Stadium in Ann Arbor, Mich., on Saturday, May 4, 2024. (Jacob Hamilton/Ann Arbor News via AP)
Pro-Palestinian protesters demonstrate during the University of Michigan's Spring 2024 Commencement Ceremony at Michigan Stadium in Ann Arbor, Mich., on Saturday, May 4, 2024.( Jacob Hamilton/Ann Arbor News via AP)
A graduate waits for the University of Michigan's Spring 2024 Commencement Ceremony to begin at Michigan Stadium in Ann Arbor on Saturday, May 4, 2024. (Jacob Hamilton/Ann Arbor News via AP)
CORRECTS PHRASE ON BANNER - A plane pulling a banner that reads "Divest From Israel Now! Free Palestine" flies overhead before the University of Michigan's Spring 2024 Commencement Ceremony at Michigan Stadium in Ann Arbor, Mich., on Saturday, May 4, 2024. (Katy Kildee/Detroit News via AP)
A plane bearing a banner that reads ""We stand with Israel jewishlivesmatter.us" flies overhead before the University of Michigan's Spring 2024 Commencement Ceremony at Michigan Stadium in Ann Arbor, Mich., on Saturday, May 4, 2024. (Jacob Hamilton/Ann Arbor News via AP)
Graduates sporting Israeli flags and pins shout at Pro-Palestinian protesters as they demonstrate during the University of Michigan's Spring 2024 Commencement Ceremony at Michigan Stadium in Ann Arbor, Mich., on Saturday, May 4, 2024.( Jacob Hamilton/Ann Arbor News via AP)
Pro-Palestinian protesters demonstrate during the University of Michigan's Spring 2024 Commencement Ceremony at Michigan Stadium in Ann Arbor, Mich., on Saturday, May 4, 2024.( Jacob Hamilton/Ann Arbor News via AP)
Police and pro-Palestinian demonstrators stand across from one another on the grounds of the University of Virginia, in Charlottesville, Va., where tents are set up, Saturday, May 4, 2024. (Cal Cary/The Daily Progress via AP)
Police move pro-Palestinian demonstrators back from the grounds of the University of Virginia, in Charlottesville, Va., where tents are set up, Saturday, May 4, 2024. (Cal Cary/The Daily Progress via AP)
The aftermath of a site is seen after authorities broke up a demonstration by pro-Palestinian protesters on the campus of the University of Virginia, in Charlottesville, Va., Saturday, May 4, 2024. (Cal Cary/The Daily Progress via AP)
Pro-Palestinian demonstrators take videos and photos with their phones on the University of Virginia campus as police break up what authorities called an "unlawful assembly," in Charlottesville, Va., where tents are set up, Saturday, May 4, 2024. (Cal Cary/The Daily Progress via AP)
Pro-Palestinian protesters demonstrate during the University of Michigan's Spring 2024 Commencement Ceremony at Michigan Stadium in Ann Arbor, Mich., on Saturday, May 4, 2024.( Jacob Hamilton/Ann Arbor News via AP)
Pro-Palestinian protesters demonstrate during the University of Michigan's Spring 2024 Commencement Ceremony at Michigan Stadium in Ann Arbor, Mich., on Saturday, May 4, 2024. (Jacob Hamilton/Ann Arbor News via AP)
Police with riot shields form a line across from pro-Palestinian demonstrators on the grounds of the University of Virginia, in Charlottesville, Va., where tents are set up, Saturday, May 4, 2024. (Cal Cary/The Daily Progress via AP)
A police officer, right, watches a protester wave a Palestinian flag on the grounds of the University of Virginia, in Charlottesville, Va., where tents are set up, Saturday, May 4, 2024. (Cal Cary/The Daily Progress via AP)
Police with riot shields detain a pro-Palestinian demonstrator on the ground as a National Lawyers Guild representative holds up an emergency contact notebook, on the University of Virginia campus, in Charlottesville, Va., where tents are set up, Saturday, May 4, 2024. (Cal Cary/The Daily Progress via AP)
A pro-Palestinian demonstrator wears goggles and a mask as police with riot shields and protesters stand across from one another on the grounds of the University of Virginia, in Charlottesville, Va., where tents are set up, Saturday, May 4, 2024. (Cal Cary/The Daily Progress via AP)
Police lift a pro-Palestinian demonstrator from the ground on the University of Virginia campus, in Charlottesville, Va., where tents are set up, Saturday, May 4, 2024. (Cal Cary/The Daily Progress via AP)
