During the pandemic families have had to shelter in place and both parents and adult children have been forced to work from home. Given the lack of a vaccine, this trend may continue for quite some time. It is difficult to predict if these societal changes will have a long-term effect.  For example, Facebook recently announced that it will begin allowing certain employees to permanently work remotely and, within a decade, Facebook expects that half of its employees will do so.

These changes may ultimately migrate into being the accepted business practice in other industries and professions. State boundaries may become far less significant and professional licensing rules may be forced to adjust to this changed workplace dynamic. There will also be important tax implications when people regularly work from home. The IRS and many state and local taxing authorities do not subscribe to the quaint notion of home being a place where one’s heart is and it is important to note that states have their own rules governing the authority to tax that are limited only by Constitutional considerations. Some states, like New York, apply a dual test empowering the state to tax persons who either meet an annual statutory day’s test or a domicile test. N.Y.S. Tax Law Section 605(b). To illustrate, a taxpayer who maintains a permanent place of abode becomes a statutory resident on his 184th day in New York. The taxpayer is then required to pay tax in New York on his worldwide income.