The Case of the Telecommuter Tax, Or How Greedy Can The Government Get?

Modern technology certainly has its advantages. Worldwide communication is easy. Therefore, more people find it convenient and practical to work from home.

Now, New Jersey reserves the right to collect taxes from any company that is “doing business” within the state. This rule normally applies to out of state businesses that have offices, stores, or warehouses in New Jersey.

Recently, a New Jersey court ruled that the state’s power to tax out-of-state businesses goes even further. A software company based in Maryland allowed one of its employees to work from home in New Jersey. She would “telecommute” to work every day, rather than drive all the way down to Maryland.

The company argued that it was not subject to New Jersey taxes, just because one of its employees worked out of her New Jersey home. Unfortunately, the court disagreed.

The court decided that, because the employee was regularly programming software from her in-state home, her employer was doing business in New Jersey. As a result, the company had to pay New Jersey taxes.

In my opinion, this ruling goes too far. Businesses should not be punished for allowing their employees to work from home. Rather, they should be applauded.  Telecommuting saves time, encourages productivity, and conserves energy. It appears that any excuse to collect taxes is a good excuse for the government.

I would like to take this opportunity to wish all of my readers, clients and friends the most joyous of holiday seasons, and a happy new year.