The recent decision by the New York Tax Appeals Tribunal in Matter of Edward A. and Doris Zelinsky (DTANOS. 830517 AND 830681, May 9, 2025) provides crucial guidance for CPAs advising nonresident clients employed by New York businesses, particularly in the wake of the increased remote work environment. This article delves into the factual background, the petitioners’ arguments, the legal framework applied, and the Tribunal’s reasoning, highlighting the continued relevance and application of New York’s "convenience of the employer" rule.

Factual Background

Petitioners, Edward A. and Doris Zelinsky, are residents of Connecticut. Edward A. Zelinsky (hereinafter "petitioner") is a professor of law at the Benjamin N. Cardozo School of Law of Yeshiva University in Manhattan ("Cardozo"), a New York-based employer. Petitioner earned New York source income in 2019 and 2020 from Cardozo. His job duties for Cardozo included teaching, meeting with students, grading examinations, writing recommendations, and conducting scholarly research and writing.

The petitioners were previously involved in a significant New York tax case, Matter of Zelinsky v Tax Appeals Trib. of State of N.Y., decided by the New York Court of Appeals in 2003. The facts of petitioner’s work situation in tax year 2019 were stipulated by the parties to be the same as they were in tax years 1994 and 1995, which were at issue in the 2003 Matter of Zelinsky decision.

For tax year 2019, petitioner initially reported his entire Cardozo salary as New York source income. Petitioners later filed an amended return, claiming a refund by reducing their reported New York source income allocation to 20.50% (from 55.41%), allocating income to Connecticut for 143 days worked outside of New York. These days were reported as spent at home in Connecticut performing legal scholarship (researching and writing) and administrative tasks. The Division of Taxation ("Division") rejected this refund request, premised on the application of the convenience of the employer rule.

The 2020 tax year was significantly impacted by the COVID-19 pandemic. From January 21, 2020, until March 15, 2020, petitioner commuted from Connecticut to teach classes in person at Cardozo three days per week. Effective March 20, 2020, Governor Cuomo mandated that businesses utilize telecommuting or work from home procedures to the maximum extent possible, and required employers to reduce their in-person workforce by 100% no later than March 22, 2020. In compliance with this Executive Order, Cardozo closed its doors to all in-person activity commencing March 16, 2020. From March 16, 2020, through December 31, 2020, petitioner worked exclusively from his home in Connecticut, teaching and meeting with students and faculty via Zoom, and continuing legal research and writing. During this period, petitioner did not physically come into New York to work and did not have a classroom or office available to him at Cardozo.

For tax year 2020, petitioner initially reported his entire Cardozo salary as New York source income. Petitioners later filed an amended return requesting a refund, allocating only $24,185.00 of his salary as New York source wages (7.03% of income). In response to a request for information, petitioner reported 207 days worked at home in Connecticut in 2020, leaving only 24 days worked at Cardozo. The Division issued an account adjustment notice allowing a partial refund but denying the majority of the requested refund. This denial was also premised on the application of the convenience of the employer rule.

Petitioners filed an exception to the Administrative Law Judge’s (ALJ) determination which sustained the Division’s denials for both years.

Petitioners’ Arguments

The petitioners’ request for relief centered on the argument that the Division improperly allocated petitioner’s entire Cardozo salary to New York. They contended that income attributable to days worked from their home in Connecticut should be sourced to Connecticut, not New York.

For 2019, their argument, while similar to the 2003 Matter of Zelinsky case, appears to have challenged the application of the convenience rule on constitutional grounds, particularly Due Process and dormant Commerce Clause violations, arguing it resulted in unconstitutional extraterritorial taxation.

For 2020, petitioners added the argument that the days worked from home after March 16, 2020, were performed out of necessity for Cardozo, specifically because of Governor Cuomo’s Executive Order requiring businesses to reduce their on-site workforce and the unavailability of his office or classroom. They argued that income for this period should be allocated to Connecticut because it was earned "wholly without New York state" during the effective period of the Executive Order. They also argued that the convenience rule was inapplicable during this period as he had no New York-based office or classroom available.

Constitutionally, petitioners argued that the 2003 Matter of Zelinsky decision was no longer controlling precedent because its holding had been eroded by subsequent Supreme Court cases, specifically MeadWestvaco Corp. v Illinois Dept. of Revenue, 553 US 16 (2008) and Comptroller of the Treasury of Maryland v Wynne, 575 US 542 (2015). They claimed the New York tax failed the Due Process Clause by taxing extraterritorial income. Regarding the dormant Commerce Clause, they argued it required sourcing income attributable to days worked from home to Connecticut for fair apportionment purposes, citing Comptroller of the Treasury of Maryland v Wynne and Central Greyhound Lines, Inc. of New York v Mealey, 334 US 653 (1948).

Petitioner also argued that the ALJ improperly omitted facts regarding the importance of his scholarship to his employer, which he felt should be considered as important as his teaching responsibilities. He distinguished the 2003 Zelinsky case partly on the basis that his scholarship is a core function, not "ancillary".

Legal Framework

New York law taxes nonresidents on income derived from or connected with New York sources, including income from a business, trade, profession, or occupation carried on in New York. When a nonresident employee performs services both within and without New York, income is determined by apportionment and allocation according to the Division’s regulations. The portion of compensation attributable to services performed within New York is the ratio of total days worked in New York to total days worked both in and out of the state.

The key regulation at issue is the convenience of the employer rule, set forth in 20 NYCRR 132.18(a). This rule limits the apportionment of income for days worked outside New York, stating that any allowance for such days must be based upon the performance of services which of necessity, as distinguished from convenience, obligate the employee to out-of-state duties in the service of the employer. Under this rule, if a nonresident employee works out-of-state for their own convenience and not the employer’s necessity, those days are treated as if they were worked in New York.

The Tribunal also addressed the constitutional limitations on state taxation:

Due Process Clause (US Const Amend XVI, § 1): Requires a definite link or minimum connection between the state and the activity taxed, and a rational relationship between the tax and the values connected with the taxing state.
Dormant Commerce Clause (US Const art I, § 8,): Prohibits state taxation that discriminates against or unduly burdens interstate commerce. A state tax on interstate commerce must satisfy a four-part test from Complete Auto Transit, Inc. v Brady, 430 US 274 (1977), reh denied 430 US 796 (1977), including the requirement of fair apportionment.
- Fair apportionment is tested for internal consistency (if every state imposed the tax, would multiple taxation result?) and external consistency (does the tax reach only that portion of income reflecting the in-state activity?).

New York courts have consistently upheld the convenience rule against constitutional challenges, finding it comports with Due Process and the Commerce Clause. The prior Matter of Zelinsky (2003) case specifically upheld the rule’s application to Mr. Zelinsky, finding sufficient connection to New York via his physical presence and availing himself of the New York economic market through his employment with Cardozo. The court also held in that case that a taxpayer crossing state lines to work at home does not implicate an interstate market in which residents and nonresidents compete, thus not offending the Commerce Clause.

Tribunal’s Analysis and Application to Facts

The Tribunal reviewed the ALJ’s determination and the petitioners’ exception.

Omitted Facts: The Tribunal found that the ALJ’s findings of fact properly reflected the record, acknowledging the importance of petitioner’s scholarship but noting the Court of Appeals in the 2003 Zelinsky case had described duties in addition to teaching as "ancillary".
2019 Tax Year: For 2019, the Tribunal noted the stipulated fact that petitioner’s work situation was the same as in the 1994 and 1995 tax years at issue in the 2003 Matter of Zelinsky case. Since the constitutional arguments were substantially similar, the Tribunal applied the doctrine of stare decisis (binding precedent) and concluded that the 2003 Zelinsky decision was controlling for the 2019 tax year.
2020 Tax Year - Necessity Argument: The Tribunal addressed the argument that the Executive Order requiring reduced on-site workforce presence from March 2020 onwards made working from home a necessity for the employer. The Tribunal rejected this argument, agreeing with the ALJ that merely because petitioner’s New York office/classroom was unavailable did not mean the out-of-state work was performed for the employer’s necessity. The Tribunal reasoned that Cardozo allowing employees to work from home, regardless of location, does not constitute a necessity for those job functions to be performed in those specific out-of-state locations. Determining otherwise would effectively make New York employers unwitting interstate actors. The Tribunal distinguished Matter of Fass, where specialized equipment located at the taxpayer’s out-of-state home was deemed necessary for his job duties, noting subsequent cases have limited Fass’s application. The Tribunal emphasized that the question is whether the employer required the employee to perform services in the out-of-state location for its own necessity, not merely where the employee chose or was permitted to work. Since petitioner did not show Cardozo required him to perform his job functions specifically at his Connecticut home, the convenience rule was properly applied. The Tribunal found petitioner’s argument that services were rendered "wholly without New York State" after March 15, 2020, unconvincing given he admittedly commuted into New York for work during the first quarter of 2020.
Constitutional Arguments:
- The Tribunal noted its limited jurisdiction, which does not include ruling on whether a statute is unconstitutional on its face, only on as-applied challenges.
- Due Process: The Tribunal reaffirmed, consistent with the 2003 Zelinsky case, that petitioner had a sufficient connection to New York to satisfy Due Process both because of his physical presence in New York (even if limited) and by availing himself of the benefits of the economic market in New York through his employment with Cardozo. The Tribunal found the multistate unitary business doctrine from MeadWestvaco inapplicable to an individual employee’s income taxation, and concluded that New York’s tax, being limited to New York source income, did not reach extraterritorial values in violation of Due Process. They found petitioner failed to show the income attributed to New York was disproportionate or grossly distorted.
- Dormant Commerce Clause: The Tribunal applied the Complete Auto Transit fair apportionment test.
  - Internal Consistency: The Tribunal found New York’s income tax on nonresident New York source income to be internally consistent. They posited a hypothetical where every state applied a similar scheme (worldwide income tax for residents with a credit for taxes paid to other jurisdictions, and only taxing nonresidents on income from internal sources). In this scenario, income would not be subject to multiple taxation because each state would only tax nonresidents on internally sourced income, and residents would receive a credit for taxes paid elsewhere. The Tribunal noted that any potential double taxation arises not from New York’s scheme, but from the interaction with different tax schemes in other states (like Connecticut, which the Tribunal noted does not offer a full credit to its residents on extraterritorially earned income, referencing Conn Gen Stat Ann § 12-704 and Wynne) [72-73 n.3].
  - External Consistency: The Tribunal found New York’s tax to be externally consistent because Tax Law § 631 is imposed only on income of nonresidents derived from New York sources. As applied to petitioner, the tax only reached his salary from his New York-based employer, Cardozo. The apportionment and allocation rules ensure the tax is limited to in-state activities, including employment carried on within and without New York, thus reasonably reflecting the in-state component of the taxed activity.
- The Tribunal rejected the argument that MeadWestvaco and Wynne eroded the authority of the 2003 Zelinsky case as applied. It noted that allowing employees to assign the situs of their income by choosing an out-of-state location for convenience would improperly subject employers to other jurisdictions’ laws without consent. The Tribunal also took notice of the Supreme Court’s denial of New Hampshire’s motion challenging Massachusetts’ taxation of nonresident income from Massachusetts employers during the pandemic, which left intact Massachusetts’ similar administrative action [77 n.4].

Conclusion

The Tax Appeals Tribunal denied the petitioners’ exception and affirmed the determination of the Administrative Law Judge. Consequently, the petitions challenging the refund denial for 2019 and the account adjustment notice for 2020 were denied, and the Division’s actions were sustained.

This decision reinforces the long-standing application of New York’s convenience of the employer rule for nonresidents, even in the context of widespread remote work stemming from the COVID-19 pandemic and state Executive Orders. For a nonresident employee working for a New York employer, days worked outside New York will generally still be considered New York workdays unless the services are performed out-of-state due to the necessity of the employer, a high bar that was not met by the general requirement to reduce on-site workforces or the unavailability of a physical office due to the pandemic. The decision also reiterates the Tribunal’s position that New York’s nonresident income tax, as applied through the convenience rule, complies with the Due Process and dormant Commerce Clauses of the U.S. Constitution.

Prepared with assistance from NotebookLM.