Hayes v. State Tax Commission

• Decision Date: 26 January 1978
• Citation: 61 A.D.2d 62,401 N.Y.S.2d 876
• Parties: In the Matter of Arthur Hull HAYES, Petitioner, v. STATE TAX COMMISSION, Respondent.
• Court: New York Supreme Court — Appellate Division

Page 876

401 N.Y.S.2d 876

61 A.D.2d 62

In the Matter of Arthur Hull HAYES, Petitioner, v. STATE TAX COMMISSION, Respondent.

Supreme Court, Appellate Division, Third Department.

Jan. 26, 1978.

Rosenman, Colin, Freund, Lewis & Cohen, New York City (Richard E. Halperin, New York City, of counsel), for petitioner.

Louis J. Lefkowitz, Atty. Gen., Albany (Nigel G. Wright and Ruth Kessler Toch, Albany, of counsel), for respondent, The Capitol.

Before GREENBLOTT, J. P., and KANE, MAIN, MIKOLL and HERLIHY, JJ.

GREENBLOTT, Justice Presiding.

The facts, as found by the respondent, are that petitioner was a domiciliary and resident of Connecticut for the year 1967, the year in question. At that time, he was president of CBS Radio. In 1967, petitioner entered into an agreement with CBS in which he agreed to resign as president and continue as consultant through July 31, 1969. His duties were to be as assigned by CBS. The agreement contemplated that petitioner would perform most of his duties at his home in Connecticut, but CBS reserved the right to ask petitioner to perform duties in New York and elsewhere.

On May 25, 1967, petitioner relinquished the presidency of CBS Radio and vacated his offices. After that date, he had no office in New York and performed no services for CBS in New York.

Petitioner filed a nonresident income tax return for 1967 in which he excluded from New York income salary received after May 25. Respondent, in a notice of deficiency dated September 28, 1970, allocated most of the salary to New York sources. Petitioner timely challenged the notice and, after hearing, respondent sustained the deficiency, holding that since the 150 days worked after May 25 included work performed in Connecticut by reason of petitioner's convenience and not the employer's necessity, the salary was taxable in New York. This article 78 proceeding ensued.

According to respondent's regulations, the New York income of a nonresident individual includes compensation for personal services "only if, and to the extent that, his services were rendered within this State. Compensation for personal services rendered by a nonresident individual wholly without the State is not included in his New York adjusted gross income, regardless of the fact that payment may be made from a point within the State * * * " (20 NYCRR 131.4(b)). When services are performed within and without the State, the regulation provides that sections 131.15 through 131.17 control. Section 131.16 provides that if services are performed both within and without the State, the employee can disclaim salary paid for days worked without the State only if the work was necessarily performed outside the State.

Although under petitioner's agreement with CBS he could have been required to work in New York, it is undisputed that he did not work in New York. That he could have been called to New York is of no import since the regulations make it plain that services rendered wholly without the State are not taxable in New York. Only when some work is performed...