Two-Timing Telecommute Taxes

Telecommuting — or telework — is a critical tool that can help employees, businesses and communities weather the current financial crisis, and thrive afterward. However, right now, the nation is burdened with a powerful threat to the growth of telework: the telecommuter tax. This tax is a state penalty imposed on Americans who work for employers outside their home states and sometimes telecommute.

Proposed bi-partisan federal legislation called the Telecommuter Tax Fairness Act would abolish the telecommuter tax. To help assure that the nation can take full advantage of the economic relief telework offers, Congress must pass this bill – either as stand-alone legislation or as part of a new economic stimulus package.

Relief for Employees

Working from home (or alternative sites close to home) can save struggling families money on gasoline, parking, train and bus fares, dry cleaning, business wardrobes and work-week meals. They can save on dependent care by providing some of the necessary care themselves during the time they previously spent commuting.

Telework can also relieve the considerable strain on Americans nearing retirement who have unexpectedly lost their pensions and must now continue working. Working indefinitely may be a hardship for many older employees. Some may not be able, physically, to continue making a daily round-trip commute. Some may need to move closer to their adult children who live out-of-state, either to receive physical help from them, or to help them with child-care costs by baby-sitting. If Americans who have been robbed of their retirements can work from home at least some of the time, they can stay on the job without having to travel as often or live as close to their offices.

Relief for Employers

Employers (both public and private) can use telework to slash real estate and energy expenses. When fewer employees work on-site every day, employers need to rent, heat, cool and light less office space.

Implementing telework can also reduce recruitment and turnover costs: Employers offering flexibility can attract top-tier candidates from a wide geographic area, and generate loyalty among valued employees.

Telework can reduce business interruption costs when an emergency or other major disruption occurs near the main office. If, for example, a severe storm, fire, bomb threat or transit strike affects the employer’s area, a staff trained to work remotely can keep operations running smoothly.

And organizations adopting telework can become more productive. Employees can replace commute time with work time; concentrate better because they are less exposed to the frequent interruptions typical in busy offices; reduce absenteeism by completing tasks at home instead of taking whole days off when they have to meet non-work responsibilities, like caring for sick children, and reduce “presenteeism”, the phenomenon of employees showing up at the office when they are too sick to be productive and are likely to compromise the health and productivity of co-workers.

Relief for Communities

Telework can bring new Internet-based jobs to rural areas with sagging economies. It can also bring new home buyers to such regions: Americans who want to maintain their high paced, big-city careers in a slower paced, more scenic environment. A significant growth in the population of home-based workers in these communities can also produce growth in businesses catering to their needs, such as home office supply stores and business service providers.

The Telecommuter Penalty Tax

Despite the important help telework can provide during and after the financial meltdown, states may punish nonresident teleworkers by subjecting them to a telecommuter tax. New York has been particularly aggressive on this front.

Under the “convenience of the employer” rule, when a nonresident of New York and his New York employer agree that the employee may sometimes work from home, New York will tax him on his entire income, both the income he earns when he works in New York, and the income he earns when he works at home, in a different state. Because telecommuters’ home states can also tax the wages telecommuters earn at home, they are taxed twice on those wages.

In some cases, a telecommuter’s home state may give him a credit for the taxes he pays New York on the income he earns at home. However, even in such cases, the employee may be penalized for telecommuting. When New York taxes income at a higher rate than the home state, the telecommuter must pay taxes on his home state income at the higher rate.

By subjecting nonresident employees to double or excessive taxation if they telecommute, a state like New York needlessly limits the strategies available for coping with our ailing economy.

Harm to Employers

By deterring telework, the telecommuter tax frustrates businesses trying to decentralize their workers and prevents them from exploiting telework’s business benefits.

In addition, the hefty payroll obligations the telecommuter tax imposes on businesses can force companies to relocate. Indeed, The New York Times reported this year on a small business that planned to leave New York because tackling the state's claims under the convenience of the employer rule proved too draining. (See David S. Joachim, "Telecommuters Cry 'Ouch' to the Tax Gods," The New York Times, Special Section on Small Business, Feb. 20, 2008.)

Further, by thwarting the growth of telework, the telecommuter tax encourages traffic congestion, a menace to productivity. Excessive traffic can, for example, cause employees to arrive late for work and delay customer deliveries.

Harm to States

In addition to employees and employers, telecommuters' states of residence also suffer under the telecommuter tax. Consider a Virginia resident who telecommutes most of the time to his New York employer. If Virginia grants the telecommuter a credit for taxes paid to New York on his home state income, Virginia forfeits its tax revenue to New York. In so doing, Virginia effectively subsidizes public services in New York (like transportation, police, fire and other emergency services) while it makes the same services available to its resident who is working in Virginia. States currently struggling with steep budgetary shortfalls cannot afford to cede their own revenue to other states. The employee who telecommutes, meanwhile, suffers under a reduced budget for home state spending.

Even the state imposing the tax loses. In addition to driving business away, New York’s telework tax policy can drive part-time telecommuters away. Because the convenience of the employer rule applies only to nonresidents who spend time working in New York, nonresidents can avoid the rule by avoiding the state: They can increase their telecommuting from part-time to full-time, or take jobs in their home states. When nonresidents stop traveling to New York for work, New York gives up the opportunity to tax any of their wages, and New York restaurants, hotels and other businesses lose the income these teleworkers would have generated on their commuting days.

The Remedy

The Telecommuter Tax Fairness Act would eliminate these ills, prohibiting states like New York from taxing the income nonresidents earn at home in other states.

The bill has bi-partisan support in both Houses of Congress, including the support of lawmakers from Connecticut, Maine, Mississippi and Virginia. Outside Congress, the measure has been endorsed by advocates for telecommuters, taxpayers, homeowners and small businesses.

To help assure that the greatest number of employees and businesses can maximize telework’s economic benefits – during the current crisis and afterward – Congress should pass the Telecommuter Tax Fairness Act. Whether as an addition to a new stimulus package or in a separate measure, Washington must see to it that telecommuter tax fairness becomes the law.

by Nicole Belson Goluboff 11/09/2008

Metro Plans for Inauguration Day

Metrorail will operate rush hour service for 17 consecutive hours (4 a.m. to 9 p.m.), will stay open for two extra hours (until 2 a.m.), charge $4 for parking at its facilities and will be one important transportation alternative for people who are planning to attend the Inauguration of President-elect Barack Obama on Tuesday, January 20, 2009.

Metro officials expect extremely crowded conditions on Inauguration Day. Metrorail stations and trains will be packed as people head to the Inauguration, and expect to see even tighter conditions afterward. Expect the crowds to be huge with hundreds of thousands of people expected to be in the nation's capital not only for Inauguration Day, but for the days preceding it as well.

The U.S. Secret Service has deemed the Inauguration as a special national security event and due to security measures, the Archives-Navy Memorial-Penn Quarter station on Metro's Green and Yellow Lines and the Smithsonian station on the Blue and Orange Lines, will be closed all day on Inauguration Day, Tuesday, January 20.

Virginia Prepares for Inauguration Traffic

Motorists urged to plan ahead, expect major delays

FAIRFAX, Va. - Virginia State Police, the Virginia Department of Transportation and the Department of Rail and Public Transportation are preparing for thousands of buses and vehicles to travel through Virginia for the Inauguration on January 20, 2009, and urge visitors to know what to expect before leaving home to ensure a safe and less stressful trip.

We urge motorists - whether traveling by bus, van or car - to plan their route well in advance, know what bridges and roads will be restricted and where they will park, make sure their vehicle is in top operating condition, travel with a full tank of gas and prepare for long delays and a lot of walking, said Colonel W. Steven Flaherty, Virginia State Police Superintendent.

Road and Bridge Restrictions:
Beginning at 2 a.m. Tuesday, January 20, personal vehicles (cars, SUVs, pickups, vans, etc.) will not be allowed to enter Washington from Virginia. Those driving are encouraged to seek out public transportation to access the District on Inauguration Day. (See Public Transit Resources for more information). Personal vehicles will only be able to enter Washington by driving in from designated Maryland routes.
Beginning at 2 a.m. Tuesday, January 20, only authorized vehicles - emergency vehicles, buses, taxis, and for-hire limos and car services - will be permitted to travel northbound on Interstate 395 and eastbound on Interstate 66 inside the Capital Beltway/I-495. All other traffic heading to Washington on Interstate 95 will be diverted at the Springfield interchange (Exits 170B and 170C) onto I-495 North (Inner Loop) or I-495/I-95 East (Outer Loop). All general traffic traveling eastbound on I-66 and toward Washington on the Dulles Toll Road will also be diverted to the Capital Beltway/I-495.

Only authorized vehicles will be allowed to cross the 14th Street Bridge, Roosevelt Bridge and Key Bridge, all of which lead from Virginia into Washington, D.C. The Memorial Bridge and Chain Bridge will be open to pedestrians only.

To augment patrols and expedite emergency response along Interstates 95, 66 and 495, Virginia State Police will be bringing in several hundred troopers from around the state to the Northern Virginia region. Increases in manpower and resources will begin Monday, January 19, and continue through Wednesday, January 21.

I-95/395 HOV Schedule:
· From 4 p.m. Saturday, January 17 until 3 a.m. Tuesday, January 20, the I-395/95 HOV lanes will be northbound for vehicles carrying three or more people (HOV-3).
· From 3 a.m. to 6 p.m. on Tuesday, only buses and authorized vehicles will be permitted to use the I-95/395 HOV lanes from Route 234/Dumfries to Washington.
· The I-95/395 HOV lanes will open to HOV-3 traffic at 5 a.m. Wednesday, January 21.
· The I-95/395 HOV lanes will be open southbound for HOV-3 vehicles from 8 p.m. Tuesday, January 20, until 3 a.m. Wednesday, January 21, and from 11 a.m. Wednesday, January 21, until 9 p.m. or later.
I-66, Dulles Toll Road and Dulles Connector Road HOV Schedule:
· From 4 p.m. Saturday, January 17, until 3 a.m. Tuesday, January 20, HOV-2 will be in effect eastbound.
· From 3 a.m. to 6 p.m. Tuesday, January 20, only buses and authorized vehicles will be allowed to use the eastbound HOV lanes.
· From 6 p.m. Tuesday, January 20, until 9 p.m. Wednesday, January 21, HOV-2 will be in effect westbound.
VDOT will help motorists by:
· Pre-treating ramps, bridges and critical locations on highways and major commuter routes with anti-icing chemicals regardless of the forecast. Major commuter lots in Northern Virginia will also be pre-treated.
· Suspending all lane closures in Virginia for construction or maintenance work on Interstates 66, 95, 395 and 495. In addition, lane closures will be suspended on heavily traveled roads in Northern Virginia to include Routes 1, 7, 28, 50, 234, 236, the Dulles Toll Road, Fairfax County Parkway and Prince William Parkway. This restriction will be in effect from Friday, January 16, until noon, Wednesday, January 21.
· Providing portable toilets at the I-66 and I-95 rest areas in Northern Virginia and Fredericksburg.
· Doubling the number of safety service patrols on the interstates on January 20. Forty patrollers will be pre-positioned and available to assist stranded motorists and provide traffic control. The patrol wears bright, highly visible uniforms and drives specially equipped pickup trucks.
· Re-timing traffic signals on major routes as needed to keep traffic moving as best possible.
· Staging seven wreckers at locations along interstates to remove disabled vehicles. Motorists can stay informed by:
· Calling 511 from a land line or a cell phone for the latest traffic and travel information. Drivers are reminded to only dial 911 or #77 on a cellular phone in emergency situations.
· Tuning into Virginias highway advisory radio for information on delays and possible detours due to accidents or congestion.
· Getting the latest traffic conditions and travel times on overhead
and roadside message signs on I-95, 495, 66 and 81, and Route 29.
· Carrying an emergency kit in their vehicles to include an ice scraper and brush, wiper fluid, blankets, extra warm clothing, a bag of sand or cat litter; flashlight and cell phone, with extra batteries for each; jumper cables; water, snacks, paper towels and a first aid kit.