New York Advisory Opinion TSB-A-83 (1)I: Can a nonresident employee who works part of each day in New York and part outside New York allocate income by hours worked, rather than by counting whole working days?

Plain-English summary

Samuel Frank asked about the proper method for a nonresident employee to apportion and allocate income when that employee performs services both within and outside New York State during each of a number of days - for example, splitting a workday between a New York office and an out-of-state location, rather than working entire days in one place or the other.

The Department walked through the general allocation framework: a nonresident's New York adjusted gross income under Tax Law § 632(a) includes only income connected with New York sources, and where a business or occupation is carried on partly within and partly without the state, Tax Law § 632(c) requires apportionment under Tax Commission regulations. The standard regulatory method, 20 NYCRR 131.17(a), allocates a nonresident employee's compensation using the ratio of total working days spent in New York to total working days spent both within and without the state - essentially a whole-day counting method.

But the Department pointed to 20 NYCRR 131.22, which is explicitly designed to apportion income "in a fair and equitable manner" and expressly allows a nonresident to submit an alternative method of apportionment and allocation instead of the standard days-worked approach. For an employee who splits individual days between New York and elsewhere, the Department confirmed that allocating by hours or fractions of a day - rather than forcing each day into an all-or-nothing New York/non-New York bucket - is an acceptable alternative method, as long as the taxpayer fully explains the method used and attaches that explanation to the nonresident New York tax return.

What this means for you

Nonresident employees who split individual workdays between New York and another location

You're not limited to counting only whole days as "New York days" or "non-New York days." If you genuinely work part of a day in New York and part elsewhere, you can allocate your income by hours or fractions of a day instead, which may more fairly reflect your actual New York-source income - just make sure to attach a full explanation of your method to your return.

Employers with nonresident employees whose daily schedules split between jurisdictions

Understanding that an hours-based allocation option exists can help you advise mobile employees (sales staff, consultants, split-office workers) on how to more precisely document and support their New York income allocation.

Accountants preparing nonresident returns for clients with split-location workdays

Consider whether an hours-based or fractional-day allocation method would produce a more accurate (or more favorable and equally defensible) result than the standard whole-day method under 20 NYCRR 131.17(a) - and if you use it, attach a full written explanation of the method to the nonresident return as 20 NYCRR 131.22 requires.

Common questions

Q: I work part of each day in New York and part outside the state - do I have to count each day as either entirely "New York" or entirely "not New York"?
A: No. While the standard method allocates income by whole working days, 20 NYCRR 131.22 lets you use an alternative method - including allocating by hours or fractions of a day - as long as you fully explain your method and attach that explanation to your nonresident return.

Q: Do I need special approval from the Department to use an hours-based allocation method?
A: The opinion doesn't describe a pre-approval process - it describes attaching a full explanation of the method to your return. As with any alternative method, be prepared for the Department to review and question the method if requested.

Q: Is the hours-based method automatically better for a nonresident than the standard days-worked method?
A: Not necessarily - it depends on your specific work pattern. The point of this opinion is that the alternative is available and permitted when it more fairly reflects a split-day work pattern, not that it always produces a lower tax result.

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/income_ao_1983.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/income/a83_1i.pdf

Original ruling text

New York State Department of Taxation and Finance

Taxpayer Services Division
Technical Services Bureau

TSB-A-83 (1) I
Income Tax
February 4, 1983

STATE OF NEW YORK
STATE TAX COMMISSION
ADVISORY OPINION

PETITION NO. I821221B

On December 21, 1982 a Petition for Advisory Opinion was received from Samuel Frank,
63-64 77th Place, Middle Village, New York 11379.
The issue raised is the proper method of apportionment and allocation of the income of a
nonresident employee who performs services both within and without New York State during each
of a number of days, for purposes of the Personal Income Tax imposed under Article 22 of the Tax
Law.
The New York adjusted gross income of a nonresident individual, the starting point in
determining his or her tax due under Article 22 of the Tax Law, includes the net amount of items of
income, gain, loss and deduction entering into federal adjusted gross income which are "derived from
or connected with New York sources." Tax Law §632(a).
Section 632(c) of the Tax Law provides that:
"If a business, trade, profession or occupation is carried on partly within and partly without
this state, as determined under regulations of the tax commission, the items of income, gain, loss and
deduction derived from or connected with New York sources shall be determined by apportionment
and allocation under such regulations."
The Regulations issued in accordance with the foregoing provide, in relevant part, that:
"The New York adjusted gross income of a nonresident individual rendering personal
services as an employee includes the compensation for personal services entering into his Federal
adjusted gross income, but only if, and to the extent that, his services were rendered within New
York State .... Where the personal services are performed within and without New York State, the
portion of the compensation attributable to the services performed within New York State must be
determined in accordance with sections 131.16 through 131.18 of this Part." 20 NYCRR 131.4(b).
Section 131.17(a) of the Regulations provides that:
"If a nonresident employee performs services for his employer both within and without New
York State, his income derived from New York State sources includes that proportion of his total
compensation for services rendered as an employee which the total number of working days
employed within New York State bears to the total number of working days employed both within
and without New York State .... " 20 NYCRR 131.17(a).
Section 131.22 of the Regulations provides that:
ROBERT W. BOUCHARD, ACTING COMMISSIONER
LOUIS M. JACOBSON, DEPUTY COMMISSIONER
FRANK J. PUCCIA, DIRECTOR
TP-8 (8/82)

-2­
TSB-A-83 (1) I
Income Tax
February 4, 1983

"Section 131.14 through 131.21 are designed to apportion and allocate to New York State,
in a fair and equitable manner, a nonresident's items of income, gain, loss and deduction attributable
to a business, trade, profession or occupation carried on partly within and partly without New York
State . A nonresident individual may submit an alternative method of apportionment and allocation
with respect to items of income, gain, loss and deduction attributable to a business, trade, profession
or occupation carried on partly within and partly without New York State. The proposed method
must be fully explained in the taxpayer's New York State nonresident personal income tax return."
Accordingly, a nonresident employee who derives income from work performed within and
without New York during each of a number of days and who wishes to apportion and allocate such
income on the basis of hours or fractions of a day, rather than in days, worked within and without
the State, may do so. A full explanation of such method as employed by such taxpayer must be
attached to the taxpayer's tax return.

DATED: January 28, 1983

s/FRANK J. PUCCIA
Director
Technical Services Bureau