Is the salary a U.S. Foreign Service officer earns while assigned to the U.S. Mission to the United Nations in New York City subject to New York State personal income tax?

Plain-English summary

Petitioner is a member of the U.S. Foreign Service who received orders to work for up to three years at the United States Mission to the United Nations (USUN) in New York City. His "home of record" is Florida, and he intends to return there permanently once his Foreign Service career ends. During the USUN assignment, Petitioner and his spouse live in a New York City apartment that USUN leased for their sole use under a Lease and Corporate Sole Occupancy Rider. Petitioner asked whether the wages he earns at USUN are New York source income subject to New York State personal income tax.

Petitioner argued that, because his Foreign Service posting to New York is temporary, his wages should escape New York tax the same way nonresident military compensation is exempted by Tax Law § 631(e). The Department rejected the analogy: the military exemption is a specific statutory carve-out, and no comparable exemption exists in the Tax Law for Foreign Service members. The Department also noted that federal law affirmatively bars career Foreign Service members from claiming a state income tax exemption - 22 U.S.C. § 3941(d) says such members "shall not represent to the income tax authorities of ... any other State or locality that they are exempt from income taxation" because of their service.

Applying the general nonresident sourcing rules, the Department explained that a nonresident is taxed on New York source income, which includes compensation for personal services performed in New York. Because Petitioner's USUN work is physically carried on in New York, his wages would be New York source income under Tax Law § 631(a) and § 631(b)(1)(B) if he is taxed as a nonresident.

But the Department flagged a bigger risk: Petitioner might not be a mere nonresident at all. Under Tax Law § 605(b)(1)(B), someone who isn't domiciled in New York is still treated as a statutory resident - and taxed on all of their income, not just New York source income - if they maintain a permanent place of abode in the state and spend more than 183 days there in the year, unless they are in active service in the U.S. armed forces (an exception that does not extend to the Foreign Service). The USUN-leased apartment used solely by Petitioner and his spouse would qualify as a "permanent place of abode," but the Petition didn't say how many days Petitioner spent in New York or whether the apartment was maintained for substantially all of the taxable year, so the Department could not resolve statutory residency on the facts given.

What this means for you

Foreign Service and other federal personnel posted to New York

Assignment to New York on federal orders, even for a fixed and temporary term, does not by itself exempt your wages from New York tax. Unlike military pay under Tax Law § 631(e), there is no Tax Law provision exempting Foreign Service compensation, and federal law (22 U.S.C. § 3941(d)) specifically forbids Foreign Service members from claiming a state tax exemption based on their service.

Nonresidents working in New York

If you're a nonresident performing services physically in New York, expect your wages for that work to count as New York source income under Tax Law § 631(b)(1)(B) and 20 NYCRR § 132.4(b), regardless of how temporary the assignment feels.

Watch the statutory residency trap

Even if you keep an out-of-state domicile, renting or being provided a New York apartment for your sole, ongoing use can make you a "permanent place of abode" under 20 NYCRR § 105.20(e)(1). Combine that with more than 183 days physically present in New York in a year, and Tax Law § 605(b)(1)(B) makes you a statutory resident taxed on all of your income - not just what you earn in New York - unless an exception (like the armed-forces exception, which doesn't cover Foreign Service members) applies.

Common questions

Q: Does the military pay exemption in Tax Law § 631(e) cover Foreign Service wages?
A: No. The Department found no comparable exemption in the Tax Law for Foreign Service members, and federal law (22 U.S.C. § 3941(d)) actually bars them from claiming one.

Q: If Petitioner is treated as a nonresident, are his USUN wages taxable by New York?
A: Yes. Compensation for personal services performed in New York is New York source income under Tax Law § 631(a) and § 631(b)(1)(B), and is includible under 20 NYCRR § 132.4(b) because it's part of his federal adjusted gross income.

Q: Could Petitioner end up taxed on all of his income, not just his New York wages?
A: Possibly. If he maintains a permanent place of abode in New York for substantially all the taxable year and is present in the state more than 183 days, Tax Law § 605(b)(1)(B) makes him a statutory resident of New York State (and, under a nearly identical NYC Administrative Code § 11-1705(b) test, of New York City), taxable on all of his income.

Q: Why didn't the Department just decide whether Petitioner is a statutory resident?
A: Because the Petition didn't state how many days he spent in New York during the taxable year or confirm the apartment was maintained for substantially all of the year, both of which are required elements under Tax Law § 605(b)(1)(B) and 20 NYCRR § 105.20(a)(2).

Q: Does having his "home of record" in Florida protect Petitioner from New York tax?
A: Not necessarily. Florida domicile only means he isn't a New York domiciliary; it does not prevent him from being a statutory resident of New York if the permanent-place-of-abode and 183-day tests are met.

Citations and references

• Tax Law § 631(a) - defines New York source income of a nonresident individual
• Tax Law § 631(b)(1)(B) - includes income from a business, trade, profession, or occupation carried on in New York
• Tax Law § 631(e) - exempts nonresident military compensation (cited by contrast; no equivalent exists for Foreign Service pay)
• Tax Law § 605(b)(1)(B) - defines a statutory resident as a non-domiciliary who maintains a permanent place of abode in New York and spends more than 183 days in the state, absent an armed-forces exception
• 20 NYCRR § 132.4(b) - treats compensation paid to a nonresident for services performed in New York as New York source income
• 20 NYCRR § 105.20(e)(1) - defines "permanent place of abode"
• 20 NYCRR § 105.20(a)(2) - requires the dwelling be maintained for substantially all of the taxable year
• 22 U.S.C. § 3941(d) - bars career Foreign Service members from claiming exemption from state or local income tax
• New York City Administrative Code § 11-1705(b) - defines statutory residency for New York City purposes, identical in substance to the state test
• Matter of Evans, 199 A.D.2d 840 (3d Dep't 1993) - cited on the permanent place of abode standard

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/income_ao_2014.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/income/a14_2i.pdf

Original ruling text

New York State Department of Taxation and Finance

Office of Counsel
Advisory Opinion Unit

TSB-A-14(2)I
Income Tax
August 20, 2014

STATE OF NEW YORK
COMMISSIONER OF TAXATION AND FINANCE
ADVISORY OPINION

PETITION NO. I130416A

The Department of Taxation and Finance received a Petition for Advisory Opinion from
REDACTED. Petitioner asks whether wages he receives as a Foreign Service member assigned by
the United States Department of State to the United States Mission to the United Nations (USUN)
in New York City is New York source income.
Facts
Petitioner states he is a member of the Foreign Service and received orders to work for up to
three years at the USUN in New York City. Petitioner notes that his “home of record” is not in
New York State, but in the State of Florida and he intends to return to his Florida home permanently
when his career with the Foreign Service ends. Petitioner and his spouse reside in an apartment in
New York City that was leased by the USUN for their sole use during the pendency of Petitioner’s
assignment with the USUN, pursuant to a Lease and Corporate Sole Occupancy Rider.
Analysis
Petitioner asks whether the wages he receives from USUN are New York source income
subject to New York State personal income taxes. He contends that because he is a member of the
Foreign Service and is only in New York on a temporary basis, his wages should not be subject to
tax by New York State, similar to the treatment of military compensation received by nonresidents
stationed in New York. The Tax Law specifically exempts that military compensation from tax.
See Tax Law § 631(e). There is no similar provision in the Tax Law applicable to members of the
foreign service. Further, federal law does not preclude States from taxing foreign service members
and provides that career foreign service members “…shall not represent to the income tax
authorities of the District of Columbia or any other State or locality that they are exempt from
income taxation…” See 22 USCA § 3941(d). Thus, there is no statutory exemption for wages paid
to foreign service members under state tax law.
If a person is a nonresident of New York, he or she is subject to tax on the portion of his or
her items of income, gain, loss and deductions that enter into the person’s federal adjusted gross
income (FAGI), to the extent that such items are derived from or connected with New York State
sources. See Tax Law § 631(a). Income from New York sources includes income attributable to a
business, trade, profession or occupation carried on in New York. See Tax Law § 631(b)(1)(B).
This includes compensation paid to a nonresident individual for personal services rendered within
New York State if the compensation is included in the individual’s FAGI. See 20 NYCRR §
132.4(b). Thus, if Petitioner is taxed as a nonresident in New York, his wages for his work at the
USUN are subject to tax.

-2-

TSB-A-14(2)I
Income Tax
August 20, 2014

However, based on the information provided, Petitioner may be a statutory resident of
New York State and New York City for personal income tax purposes. Tax Law § 605(b) defines a
New York resident to include an individual “who is not domiciled in this state but maintains a
permanent place of abode in this state and spends in the aggregate more than one hundred eightythree days of the taxable year in this state, unless such individual is in active service in the armed
forces of the United States.” See Tax Law § 605(b)(1)(B). The definition of “resident” for
New York City purposes is provided under the New York City Administrative Code § 11-1705(b),
and is identical in substance to that for New York State income tax purposes. Petitioner did not
provide sufficient information to determine whether he was present in the State for more than 183
days in any taxable year.
The Personal Income Tax Regulations provide that “[a] permanent place of abode means a
dwelling place of a permanent nature maintained by the taxpayer, whether or not owned by such
taxpayer, and will generally include a dwelling place owned or leased by such taxpayer’s spouse.”
20 NYCRR § 105.20(e)(1); see also Matter of Evans, 199 AD2d 840 (3d Dep’t 1993). Such
dwelling place must be maintained by the taxpayer for substantially all of the taxable year. See
NYCRR § 105.20(a)(2). The apartment in New York City rented for Petitioner’s and his spouse’s
sole occupancy would qualify as a permanent place of abode. However, Petitioner did not provide
sufficient information to determine whether he maintained a permanent place of abode within the
State for substantially all of the taxable year.
Although Petitioner submits that he is a domiciliary of Florida, Petitioner would be subject
to New York State and New York City personal income taxes on all of his income if he is deemed a
New York statutory resident. However, if Petitioner is not deemed to be a New York statutory
resident, he would be subject to New York income tax only on his New York source income.

DATED: August 20, 2014

NOTE:

/S/
DEBORAH R. LIEBMAN
Deputy Counsel

An Advisory Opinion is issued at the request of a person or entity. It is limited to the
facts set forth therein and is binding on the Department only with respect to the person
or entity to whom it is issued and only if the person or entity fully and accurately
describes all relevant facts. An Advisory Opinion is based on the law, regulations, and
Department policies in effect as of the date the Opinion is issued or for the specific time
period at issue in the Opinion. The information provided in this document does not
cover every situation and is not intended to replace the law or change its meaning.