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JanZtax@aol.com
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 Posted:
Fri Nov 04, 2005 9:00 am Post subject:
Source state for intellectual property |
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Hi all. I actually "re-found" you quite by accident but am
glad to see all the "old" names are still participating in
this group and that Dick still has the energy and time to
moderate it. And, I even have a question to ask!
Client does art work for the New Yorker and a number of
other publications. He is a California resident but lives
part of the year in NY. He does not maintain a household in
NY while out of the state. All income he receives is
reported on 1099 forms. In 2005, he opened a PO Box in NY
and gave that as his address for the New Yorker payment.
I'm afraid that New York state, seeing the NY address on the
1099 will expect him to pay tax on this income as NY State
sourced. However, he did some of the work while living in
CA and some while living in NY and the truth is that it
really doesn't matter where he's physically doing the work
(none is done in an office). Does NY have a case and are
they likely to contact him?
Jan Zobel EA
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Mark H
Guest
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| Posted:
Sun Nov 06, 2005 11:09 pm Post subject:
Re: Source state for intellectual property |
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<JanZtax@aol.com> wrote:
| Quote: | Hi all. I actually "re-found" you quite by accident but am
glad to see all the "old" names are still participating in
this group and that Dick still has the energy and time to
moderate it. And, I even have a question to ask!
Client does art work for the New Yorker and a number of
other publications. He is a California resident but lives
part of the year in NY. He does not maintain a household in
NY while out of the state. All income he receives is
reported on 1099 forms. In 2005, he opened a PO Box in NY
and gave that as his address for the New Yorker payment.
I'm afraid that New York state, seeing the NY address on the
1099 will expect him to pay tax on this income as NY State
sourced. However, he did some of the work while living in
CA and some while living in NY and the truth is that it
really doesn't matter where he's physically doing the work
(none is done in an office). Does NY have a case and are
they likely to contact him?
|
If he is compensated for work that he did while he was
physically present in NY, then that income is NY source and
taxable by NY state (and City if the work was done in NYC).
If he did work for New Yorker while he was physically in CA
or some other state, than that income will be sourced to the
location where he was physically located when he performed
the services, an exeption to this exists where he was in a
non-taxing jurisdication (e.g., Nevada) or if he did work
in-flight on a plane or some similar 'non-taxable location'.
In these instances, his income will be sourced to his
"home state", which is where is primary residence is. The
P.O. Box in NY does give his nexus there as would
maintaining an apartment. If he traveled there frequently
and did not maintain a residence but only stayed in hotels,
he would still be taxable to the extent he provided services
while in NY. On the plus side, taxes he pays on income in NY
will generally be creditable against his home-state
liability.
<< ======================================================= >>
<< The foregoing is intended for educational purposes only >>
<< and does NOT constitute legal OR professional advice. >>
<< >>
<< The Charter and the Guidelines for submitting >>
<< messages to this newsgroup are at www.asktax.org. >>
<< Copyright (2005) - All rights reserved. >>
<< ======================================================= >> |
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Katie
Guest
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| Posted:
Sun Nov 06, 2005 11:10 pm Post subject:
Re: Source state for intellectual property |
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JanZtax@aol.com wrote:
| Quote: | Hi all. I actually "re-found" you quite by accident but am
glad to see all the "old" names are still participating in
this group and that Dick still has the energy and time to
moderate it. And, I even have a question to ask!
Client does art work for the New Yorker and a number of
other publications. He is a California resident but lives
part of the year in NY. He does not maintain a household in
NY while out of the state. All income he receives is
reported on 1099 forms. In 2005, he opened a PO Box in NY
and gave that as his address for the New Yorker payment.
I'm afraid that New York state, seeing the NY address on the
1099 will expect him to pay tax on this income as NY State
sourced. However, he did some of the work while living in
CA and some while living in NY and the truth is that it
really doesn't matter where he's physically doing the work
(none is done in an office). Does NY have a case and are
they likely to contact him?
|
Hi, Jan, welcome back!
Seems to me the issue here is whether the art work he does
is (a) the performance of personal services, (b) the product
of his business, or (c) the creation of intangible property.
What is the magazine paying him for? Who owns the rights
to the art work after he delivers it to the magazine?
If the magazine pays him for the original art work, which it
then owns, then I think it is either (a) or (b) and in
either case, the source of the income is the place where he
performed the services or carries on the business (i.e.,
creates the art work). So some of it may be NY source, and
some CA source, based on where he was when he did the work.
If he retains title to the art work and merely licenses the
magazine to publish it once, which would be (c), then it may
be an intangible sourced to his residence.
Under the facts you describe, he's a CA resident, and he is
not a NY resident (even if he is there more than 180 days,
as long as he doesn't maintain a permanent place of abode
there). But he may still have some NY source income arising
from this activity. The question may indeed arise because
of the NY address on the 1099s.
Katie in San Diego
<< ======================================================= >>
<< The foregoing is intended for educational purposes only >>
<< and does NOT constitute legal OR professional advice. >>
<< >>
<< The Charter and the Guidelines for submitting >>
<< messages to this newsgroup are at www.asktax.org. >>
<< Copyright (2005) - All rights reserved. >>
<< ======================================================= >>
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Frederick Lorca
Guest
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| Posted:
Sun Nov 06, 2005 11:30 pm Post subject:
Re: Source state for intellectual property |
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| Quote: | Client does art work for the New Yorker and a number of
other publications. He is a California resident but lives
part of the year in NY. He does not maintain a household in
NY while out of the state. All income he receives is
reported on 1099 forms. In 2005, he opened a PO Box in NY
and gave that as his address for the New Yorker payment.
I'm afraid that New York state, seeing the NY address on the
1099 will expect him to pay tax on this income as NY State
sourced. However, he did some of the work while living in
CA and some while living in NY and the truth is that it
really doesn't matter where he's physically doing the work
(none is done in an office). Does NY have a case and are
they likely to contact him?
|
A recent NY State Supreme Court case, In the Matter of
Thomas L. Huckaby v. New York State Division of Tax Appeals
(March 29, 2005), prompted an interesting discussion of this
issue on the MSN Tax Corner message board under the topic
heading, "telecommuters killed."
http://moneycentral.msn.com/community/message/board.asp?board=TaxCorner
In response to your comment about his physical location
while performing the services not mattering, the majority of
the NY State Supremes came to the same conclusion. Rather
than location, they looked to whether the worker was working
out of state primarily for his own convenience.
http://caselaw.lp.findlaw.com/data/ny/cases/app/8opn05.pdf
Frederick Lorca
<< ======================================================= >>
<< The foregoing is intended for educational purposes only >>
<< and does NOT constitute legal OR professional advice. >>
<< >>
<< The Charter and the Guidelines for submitting >>
<< messages to this newsgroup are at www.asktax.org. >>
<< Copyright (2005) - All rights reserved. >>
<< ======================================================= >> |
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Katie
Guest
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| Posted:
Fri Nov 11, 2005 9:00 am Post subject:
Re: Source state for intellectual property |
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The regulation that was at issue in _Huckaby_ applies to
employees.
"[i]f 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" ( 20 NYCRR 132.18 [a]).
If Jan's client is an employee of the New Yorker Magazine,
then this rule applies to him. If, as I assumed, he is an
independent contractor with his own business of creating and
selling art work to various publications, it does not.
Katie in San Diego
<< ======================================================= >>
<< The foregoing is intended for educational purposes only >>
<< and does NOT constitute legal OR professional advice. >>
<< >>
<< The Charter and the Guidelines for submitting >>
<< messages to this newsgroup are at www.asktax.org. >>
<< Copyright (2005) - All rights reserved. >>
<< ======================================================= >> |
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