Taxing Teleworkers

78 Pages Posted: 18 Nov 2021 Last revised: 22 Apr 2022

See all articles by Young Ran (Christine) Kim

Young Ran (Christine) Kim

Yeshiva University - Benjamin N. Cardozo School of Law

Date Written: October 12, 2021


Since COVID-19 has forced many governments to restrict travel and impose quarantine requirements, telework has become a way of life. The shift towards teleworking is raising tax concerns for workers who work for employers located in another state than where they live. Most source states where these employers are located could not have taxed income of out-of-state teleworkers under the pre-pandemic tax rules. However, several source states have unilaterally extended their sourcing rule on these teleworkers, resulting in unwarranted risk of double taxation — once by the residence state and again by the source state. At this time, there is no uniform guideline by state or federal governments.

Recently, New Hampshire, supported by fourteen other states, asked the U.S. Supreme Court to exercise its original jurisdiction challenging Massachusetts’ telecommuting taxes of nonresident teleworkers. Tax commentators believed this case would be one of the most significant tax decisions in recent years, but the Supreme Court declined to hear it. New Jersey also opposes New York’s long-standing telecommuting taxes under the “convenience of the employer” rule. This Article examines the constitutional challenges of maintaining pre-pandemic work arrangements for tax purposes, arguing that a source state’s extraterritorial assertion to tax nonresident teleworkers’ income likely violates the Dormant Commerce and Due Process Clauses. Also, this Article finds the Supreme Court’s decision not to exercise original jurisdiction dissatisfying in light of the substantial increase in remote work.

The problem of taxing teleworkers is not temporary because the pandemic drastically reshaped where and how people work. Recognizing the need for a uniform long-term solution, this Article argues Congress should enact federal law to preempt conflicting state law positions and enforce the primacy of residence-based taxation on teleworkers’ income. This proposal would reduce the impact various source states’ tax laws have on interstate commerce, preserve due process, and bolster policy rationales, such as taxpayers’ choice in where they reside and pay taxes as their social obligation to the community.

Keywords: telework, remote work, telecommute, dormant commerce clause, due process clause, original jurisdiction, tax nexus, federalism, federal preemption, state taxation, multistate taxation, residence, source

JEL Classification: K34, H2, H24, H7, H71, H73, H77, O15, O18

Suggested Citation

Kim, Young Ran (Christine), Taxing Teleworkers (October 12, 2021). 55 UC Davis L. Rev. 1149 (2021), University of Utah College of Law Research Paper No. 473, Available at SSRN:

Young Ran (Christine) Kim (Contact Author)

Yeshiva University - Benjamin N. Cardozo School of Law ( email )

55 Fifth Ave.
New York, NY 10003
United States


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