In December 2023, the Matter of Zelinsky II1 resulted in a New York administrative law judge (ALJ) upholding the Tax Department’s position that New York’s onerous convenience of the employer rule can apply to a taxpayer even in the situation where the taxpayer’s employer closed its New York office. On appeal,2 in May 2025, the New York Tax Appeals Tribunal agreed with the ALJ.
The Very Beginning—Zelinsky I3
During Round I, Professor Zelinsky had previously challenged the convenience of the employer rule on constitutional grounds decades earlier, and New York’s highest court upheld application of the rule. Edward Zelinsky, a Connecticut resident, was a professor at Cardozo School of Law at Yeshiva University in New York City. Zelinsky generally taught classes and met with students in New York three days a week and worked from home two days a week. On his 1994 and 1995 nonresident New York tax returns, Zelinsky apportioned his salary to reflect the days he spent teaching in New York and assigned the remainder of his salary to Connecticut. The New York State Department of Taxation and Finance issued tax deficiencies against Zelinsky, applying New York’s convenience-of-the-employer rule. That rule held that the days that Zelinsky worked from Connecticut should be counted in New York because Zelinsky worked from home for his own convenience and was not required to do so by his employer. Zelinsky contested the deficiencies and argued that the application of the convenience-of-the-employer rule violated the Commerce Clause and Due Process Clause of the United States Constitution. The Tax Appeals Tribunal rejected Zelinsky’s constitutional claims. Zelinsky filed a lawsuit in the New York Supreme Court, Appellate Division that resulted in the Court confirming the Tribunal decision. On further appeal to the Court of Appeals, the tax assessment was once again upheld.
Round II—2019
The Zelinskys filed an amended New York State nonresident and part-year resident income tax return for tax year 2019, claiming a refund by reducing their reported nonresident income allocation from the full salary from Cardozo to 20.50% of this income, allocating the remaining income to Connecticut instead of New York, claiming Professor Zelinsky worked outside of New York for 143 days in tax year 2019.
The nonresident and part-year resident income allocation worksheet reported that the professor commuted from his home in Connecticut to work in Manhattan for 84 days, and the remainder of his work time in tax year 2019 for Cardozo (143 days reported as worked outside of New York State) was spent at home in Connecticut, performing legal researching and writing and performing administrative tasks. These facts of petitioner’s work situation in tax year 2019 are the same as they were in tax years 1994 and 1995, which were at issue in Zelinsky I. The rejection of the petitioners’ refund request by deemed denial for tax year 2019 is based (again) on the application of the convenience of the employer test as set forth in the Division’s regulations at 20 NYCRR 132.18 (a).
Round II—2020
Enter COVID-19. Zelinsky amended 2020 to again challenge the convenience of the employer rule, this time focusing on the fact that no one was allowed to work in New York City after Governor Andrew M. Cuomo declared a disaster emergency for the entire state of New York. This declaration was followed by the U.S. Secretary of Health and Human Services declaring a public health emergency for the entire country.
Zelinsky reported his entire Cardozo salary as New York source income on the original 2020 income tax return, including the portion of such salary attributable to the days when he worked at his home in Connecticut. From January 21, 2020, until March 15, 2020, Professor Zelinsky taught his classes in person at Cardozo in Manhattan by commuting from Connecticut three days per week to Cardozo. Beginning March 16, 2020, through the end of the year, he worked exclusively at his home in Connecticut and never physically went into New York to work.
He taught from his Connecticut home and met with Cardozo students and faculty using Zoom videoconferencing, and he continued performing legal research and writing for Cardozo at his Connecticut home. For the period March 16, 2020, through December 31, 2020, Zelinsky did not have a classroom or office available to him at the Cardozo campus in Manhattan.
On July 24, 2021, the Zelinskys jointly filed an amended New York State nonresident and part-year resident income tax return for tax year 2020, requesting a refund based on allocating less than 10% of his Cardozo salary to New York. This reflected the portion of his salary apportionable to New York earned between January 21 and March 13, while he was still commuting into the city three days per week. The Division of Taxation and the Division of Tax Appeals denied his refund requests.
The Decision
As Zelinsky did not agree with the Division of Taxation’s assessment or the ALJ’s finding, he appealed further to the Tax Appeals Tribunal. Most of the Tribunal’s decision addressed the constitutional issues previously presented in Zelinsky I. Although Zelinsky proposed that changes in technology and business operations since Zelinsky I in 1994 necessitated a revisit to the prior decision, the Tribunal did not agree. Instead, the decision resulted in a reliance on the convenience of the employer rule, as originally determined in Zelinsky I. The Tribunal acknowledged that there was a change in circumstances because of the pandemic but that Zelinsky worked from home for his own convenience. This is an unusual position for the Tribunal to take, considering that Zelinsky was prohibited from commuting into his New York office because of pandemic restrictions during the time at issue.
Zelinsky maintained that subjecting his income to New York’s income tax on nonresidents working both inside and outside of New York was in violation of the Division’s own regulations and case law regarding the sourcing of income derived from work performed outside of New York for the necessity of the employer. During the period at issue, Professor Zelinsky was required to work from his home in Connecticut for Cardozo’s necessity; therefore, the days he worked from home should be allocated to Connecticut.
In its ruling, the Tribunal stated that “…the nature of the employment relationship is paramount in considering whether the days on which a taxpayer claims to have performed personal services outside New York are subject to application of the convenience rule. In other words, the question boils down to whether the employer established a nexus in another jurisdiction by directing its employee to perform personal services in that out-of-state location for its own necessity.” Quoting from the Matter of Huckaby,4 the Tribunal stated that “[t]he convenience test stands for the proposition that New York will not tax a nonresident’s income derived from a New York employer’s participation in interstate commerce because in such a case the nonresident’s income would not be derived from a New York source.” Without such a fact, a nonresident taxpayer’s personal services performed for a New York employer will be subject to the convenience rule if the taxpayer performs those personal services both within and without New York. The Tribunal concluded that the convenience of the employer rule was properly applied, as Zelinsky did not show that Cardozo required him to perform the functions of his job at his home in Connecticut, as opposed to anywhere else.
In addition to reliance on Zelinsky I, the Court also invoked the Wayfair Supreme Court decision5 from 2018 that decided that a state can compel businesses with no physical presence in the state to collect and remit sales tax. This is an odd reference in this specific case, as Wayfair applied to sales and use tax, not income tax.
What’s Next?
Was the focus on the right question? How did the Tribunal ignore the fact that Zelinsky was prohibited from working in his New York office during the pandemic? It is difficult to conceptualize apportioning workdays to an in-state office that was not available because of a federal and state mandate to work from home. Professor Zelinsky has indicated that he intends to appeal the determination, so stay tuned for Zelinsky III.
New York’s convenience of the employer rule has been the source of great concern in neighboring states. In 2023, New Jersey enacted legislation creating a reciprocal convenience of the employer rule and offering refundable tax credits to incentivize residents to challenge New York’s taxation of remote work during the pandemic, aiming to recover hundreds of millions lost to resident tax credits for New York taxes. On June 4, 2025, the Connecticut General Assembly passed legislation under a similar approach. The legislation that would grant residents a 60% refundable credit for successful challenges to New York’s convenience rule, retroactive to January 1, 2020.
In the changing remote work environment, many employers are reconsidering the effectiveness of workers at home. Employers and employees are facing challenges in establishing the most tax-effective work arrangement, considering the variety of state and local approaches to taxing remote workers. Tax professionals at Ryan can assist with evaluating the proper planning and compliance based on your specific business operations.
Please contact our tax professionals for assistance navigating the remote work environment.
1 Matter of Zelinsky, Nos. 830517 and 830681 (November 30, 2023).
2 Matter of Edward A. and Doris Zelinsky, DTANOS. 830517 and 830681 (May 9, 2025).
3 Matter of Zelinsky v. Tax Appeals Trib. of State of N.Y., 1 NY3d 85 (2003), cert denied 541 US 1009 (2004).
4 Matter of Huckaby v. New York State Div. of Tax Appeals, 4 NY3d 427, 436 (2005), cert denied 546 US 976 (2005).
5 South Dakota v. Wayfair, Inc., 138 S. Ct. 2080 (2018).
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