itonewbie
Level 15

This is not entirely unusual.  Among the couple states that levy taxes on telecommuters, NYS is especially notorious for its tax position, which had been challenged and upheld in courts.  NYS' authority to levy tax on telecommuters is reliant on the test of whether the arrangement is for the convenience of the employer. 

The difference is that MA's new rule is temporary and is applicable regardless of whether the arrangement is for the convenience of the employer - it is instituted to maintain the status quo given the circumstances.  In other words, employees are not any worse off.  Given NH doesn't have an income tax on wages, they are not even subject to double taxation - this will not be the case if you have someone working in CT for a NY employer.

For now, it would look like biting the bullet and continuing to pay MA tax would be the way to go.  This should also help ensure the employee will be entitled to unemployment benefits if the need ever arises and avoid unnecessary legal challenges.

You won't find any advice from Intuit, which is not in the business of providing technical or legal guidance.  I doubt you'd find tax practitioners banding together and taking a contrary position to what the MA rule says.  If the court overrules MA, your clients can always file a refund claim.

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Still an AllStar