- A law professor at Cardozo Law School in New York undertook a second challenge to New York’s controversial “convenience of the employer” rule for sourcing employee compensation to New York State.
- The so-called convenience rule treats days worked out of state as New York workdays, so long as such days are for the employee’s convenience (such as working from home outside of New York) rather than the employer’s (such as making a client visit outside of New York).
- The professor had unsuccessfully challenged the convenience rule previously in 1999 but brought a renewed challenge for the 2019 and 2020 tax years based, in part, on the fact that he had to work from home during the COVID-19 crisis.
Background
On May 15, 2025, the New York Tax Appeals Tribunal (the “Tribunal”) ruled against Professor Edward Zelinsky’s (“Zelinsky”) request for a refund of New York State personal income taxes attributable to days worked from his home in Connecticut. The case, with one notable exception, was re-litigation of similar issues that Zelinsky had raised, and were denied by New York, in an earlier case, Zelinskyv Tax Appeals Trib., 1 NY3d 85 (2003), cert denied 541 US 1009 (2004).
Professor Zelinsky is a professor at Cardozo Law School in New York. His teaching duties required him to be in the classroom three days a week; but during the balance of his working time, he worked from his home in Connecticut. These were the basic facts upon which Zelinsky sought a refund of tax for tax years 1994 and 1995, which was denied by the New York Court of Appeals in 2003.
Professor Zelinsky’s second action (seeking a refund for the 2019 and 2020 tax years) raised an additional consideration based on the COVID-19 mandated shutdowns in 2020. During that crisis, Governor Andrew Cuomo issued an executive order declaring a state of emergency requiring non-essential businesses to reduce the in-person workforce by 100% on March 22, 2020. In compliance with the executive order, Cardoza Law School closed its campus on March 16, 2020, to all in person activities. Zelinsky subsequently worked from home for the duration of the 2020 calendar year, teaching his classes via Zoom video calls.
On his original returns for 2019 and 2020, Zelinsky treated the days worked in Connecticut as days worked in New York, as required under the convenience of the employer rule, found at 20 NYCRR 132.18. The applicable provision of the rule provides, “If a nonresident employee . . . performs services for his employer both within and without New York State, his income derived from New York State sources includes that proportion of his total compensation for services rendered as an employee which the total number of working days employed within New York State bears to the total number of working days employed both within and without New York State. . . . However, any allowance claimed for days worked outside New York State 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 his employer.” As the instructions to the New York nonresident return provide, days spent working from home are considered New York days if the employee’s assigned or primary work location is in New York State. Beyond the pandemic mandated restrictions, Zelinsky’s refund claim also alleged that two United States Supreme Court cases decided after the 2003 case dictated that New York refund the tax in question.
While Zelinsky’s application for a refund due to the days worked in Connecticut during 2019 and 2020 was largely denied by the Division of Taxation (the “Division”); a small portion of tax for 2020 was refunded, but irrelevant for purposes of this alert as it was not related to the convenience rule.
Forvis Mazars Insight: The facts of the second case can be bifurcated to the periods before and after Governor Cuomo’s order. The facts from the period before the order are identical to the issues raised in the earlier case; the COVID crisis changed the facts after the order in that the New York Governor had enacted a prohibition on working in New York State that directly affected Zelinsky.
The ALJ’s Decision
As is procedure in New York State, Zelinsky timely appealed the denial of his refunds to an administrative law judge (“ALJ”). The ALJ noted that Zelinsky was not contesting that his 2019 income would not be sourced to New York State under the convenience of the employer rule. In fact, the parties had stipulated with respect to 2019 that nothing had changed factually since the 2003 case. Zelinsky was merely raising the argument that the convenience rule violated the Due Process and Commerce Clauses of the U.S. Constitution.
The ALJ further noted that there were no relevant statutory and regulatory changes since the 2003 case and therefore, the decision in that case was relevant and binding to the facts in the instant case. The ALJ dismissed the Commerce Clause argument since, according to the ALJ, crossing state lines to work had no impact on interstate markets in violation of the Commerce Clause.
The ALJ considered the internal and external consistency prongs of the Commerce Clause test espoused by the Supreme Court in its 1977 decision Complete Auto Transit, Inc. v. Brady, 430 U.S. 274. The internal consistency test imagines a hypothetical whereby every state imposes the same tax regime as the New York tax at issue; it then compares a wholly intrastate taxpayer with an interstate taxpayer. The ALJ concluded that the tax was internally consistent because the credit New York offers against other states’ income taxes prevents the risk of multiple taxation by the interstate taxpayer.
The ALJ also determined that the tax was externally consistent because New York’s nonresident income tax was solely derived from Zelinsky’s employment by Cardozo (i.e., a New York located employer) in the instant case. She also rejected the due process argument because Zelinsky had availed himself of the New York economic market by virtue of his employment with Cardozo.
As to Zelinsky’s arguments that the Governor’s executive order meant that he worked from home after the order for the convenience of Cardozo, the ALJ was not convinced, ruling that just because his offices in New York were unavailable did not mean that his work in Connecticut were performed there for Cardozo’s necessity or requirement (i.e. convenience).
Zelinsky finally argued to the ALJ that the facts of the original Zelinsky case were distinguishable since a greater portion of his job was now committed to scholarship, which should not be viewed as ancillary to his other professor’s functions. The ALJ dismissed this argument since Zelinsky had failed to demonstrate that Cardozo required him to perform these services in Connecticut.
The Tax Appeals Tribunal
Zelinsky first argued that the ALJ committed a factual error by failing to recognize that Cardozo valued his scholarship and his teaching equally. Since the ALJ acknowledged this fact, the Tribunal saw no reason to modify the ALJ’s findings in this regard.
The Tribunal then considered Zelinsky’s constitutional arguments, beginning with a discussion of the convenience of the employer doctrine and its history, including a discussion of relevant cases. While acknowledging the facts for tax year 2019 were virtually identical to the facts at issue in the first case (tax years 1994 and 1995), Zelinsky contended that the United States Supreme Court’s decisions in MeadWestvaco Corp. v. Illinois Dept. of Revenue, 553 U.S. 16 (2008) and Comptroller of the Treasury of Maryland v. Wynne, 575 U.S. 542 (2015) changed the calculus that was the basis of the original Zelinsky decision.
The Tribunal noted that its grant of jurisdiction does not allow it to consider facial constitutional challenges, so it only considered the challenges as applied to the specific facts of the instant case. It dismissed Zelinsky’s due process challenge under MeadWestvaco, noting that it did not consider the unitary business doctrine implications of that case applicable to Zelinsky. According to the Tribunal, since the tax on Zelinsky as a nonresident was limited to New York source income, it did not deem the tax attributable to New York was out proportion to Zelinsky’s New York activities, and that his employment with Cardozo meant that he was availing himself of the New York economic market. As a result, the imposition of the tax did not violate the Due Process Clause.
Turning to the Commerce Clause, the Tribunal considered the applicability of the internal and external consistency tests, especially considering Wynne. It reiterated the ALJ’s findings with respect to internal consistency using a similar hypothetical. It dismissed the external consistency challenge since the tax is only imposed upon nonresidents’ New York source income. It disagreed with Zelinsky’s assertion that working in another state somehow implicated interstate commerce, even if the employee was there for his employer’s convenience rather than working from home.
The Tribunal also addressed Zelinsky’s state law claims that, with respect to the 2020 tax year, after March 15th, he was required to work from home by Cardozo since he did not have an office or a classroom available to him at the campus due to the shutdown. This, according to Zelinsky, meant that he was in fact working from home for the convenience of Cardozo. According to the Tribunal, the critical issue is whether Zelinsky’s work from home established nexus for Cardozo in Connecticut. Since Zelinsky did not establish this as fact in the record, nor did he establish as fact that Cardozo required him to work from Connecticut, the Tribunal deemed that the convenience rule required that Zelinsky’s post-March 15th wages still be sourced to New York.
Forvis Mazars Insight: The external consistency analysis of both the ALJ and the Tribunal seem conclusory. The crux of the reasoning is that since the tax on New York nonresidents only reaches New York sourced income, it is externally consistent. It does not address the critical issue – whether the sourcing of days telecommuting outside of New York as New York days creates a constitutional issue.
How Forvis Mazars Can Help
Zelinsky appealed the first case he brought all the way up to the United States Supreme Court, which denied his petition for certiorari. We can keep you apprised of developments in the case, as he is likely to appeal this case as far as he can. Additionally, we can help you understand the implications of the convenience of the employer rule – whether you are an employer considering whether you should be withholding for remote employees in states that apply the convenience rule, or you are an employee considering the applicability of this rule to your situation.