Updated: 1/200th

A month or so ago, maybe more, my father was telling me about maddening tax laws. He's a tax accountant so, yes, we do talk about things like this for fun. He told me about a particularly outrageous case he had dealt with recently:

One of his clients is an executive for a major, nation-wide corporation. She's down in Texas, or one of those other states with no state income tax. She came to New York for a big corporate meeting for executives from around the country. Just keep in mind, the corporation believes these meetings to be useful, this woman had no particular interest in visiting our state. But she came, went to the meeting, then went home. No biggie, right?

Well, not quite.

See, she was lucky that year and had a very nice income (as in, a lot of zeroes). I forget the exact method she acquired the money (stock options, some other type of bonus, income not connected to her job at all) but it was a nice chunk. So, good for her. She has chosen to live in a state that does not tax income, so, except for what the federal government takes, she gets to keep it. But New York has demanded some of it. See, she was in NY for 1/200^th of the year, so they demanded to tax her on 1/200^th of her yearly income. *

My jaw dropped when I heard this. I must have asked dad half a dozen times if he was serious. He was.

He also happens to be the proactive type. His recomendation to his client was, of course, to pay it (to avoid legal consequences) but to demand reimbursement from her employer. Just as they paid her travel expenses as a legitimate cost for her to attend a meeting that they wanted her to attend, they should pay this expense as she only incurred it because of that meeting. He also encouraged her to mention to them that she is probably not the only one with this problem and that maybe they should consider having meetings in a more economical state.



*The original post stated that the amount was 1/365^th of her income. Actually, NY considers only workdays and, since there are 200 of those per year, they took 1/200^th of her income. Which only makes it worse. Additonally, my dad told me about a different client who came into the city several times last year to be a consumer of personal legal and financial advice. While here, he was a consumer of other things as well, things like clothing, gifts, broadway shows...he too was charged 1/200^th of his income each day he visited the city.