Did you read about Thomas Huckaby in the Wall Street Journal? He telecommutes from Tennessee to NY.

Living in TN, he does his job from home, visiting his company in NY perhaps 25% of the year. The grand State of NY slapped him with taxes on 100% of his income. He took the case to the Supreme Court of the Land.

And do you know what the Supreme Court decided in his case?

Do you really want to know?

Do you really, really want to know?

They refused to hear the case at all.

Is that a shocker?

It turns out that NY isn't the only state imposing income taxes on people who don't live there. Some other states, like Pennsylvania and Nebraska, have rules similar to New York's.

If you have a job, and telecommute to antoher state, it appears that you will have to be very careful to learn the rules of your company's state's income tax authority. We can no longer take for granted that logic prevails. Especially since, once this news hit the WSJ and the wires, you know other states who are hurting for income will probably try to impose similar laws. After all, NYS didn't get shot down by the Supreme Court. So, neither will they.

What's the solution to prevent this from happening elsewhere - and to stop NY from imposing their rules on other states' residents?

Connecticut legislators, Sen. Christopher Dodd and Rep. Christopher Shays have proposed legislation proposed legislation called the Telecommuter Tax Fairness Act. The bill, which seeks to prevent states from collecting taxes from employees for work performed outside that state. The Telecommuter bill would require that workers must be physically present and working in a state before that state is allowed to collect income tax from employees.

In the meantime, if you find yourself in that position, consider changing your relationship with your employer to that of a contractor. Open a business in your own state and send your employer invoices. Be sure to adjust the compensation enough so it covers the benefits you're losing under this arrangement. When the Telecommuter Bill passes, you can go back on payroll.

So, tell everyone you know to help get this bill passed.

--- Notes:

1) TN has no personal income tax.
2) CT residents commute or telecommute to NY regularly.