The New York Court of Appeals has ruled that an out-of-state resident who telecommutes for a New York company must pay income tax on 100 percent of his income -- even though he spends just 25 percent of his time in the state.

In a 4-3 ruling, the court said Thomas Huckaby, a computer programmer at the Queens-based National Organization of Industrial Trade Unions (NOITU), must pay New York state taxes on all of his income, not just part of it, even though he mainly telecommutes from his Nashville home. The decision upheld a New York Tax Department ruling that all his income should be taxed.

Huckaby, whose home state doesn"t have an income tax, paid New York state tax on 25 percent of his income -- the time he spent working on-site at the NOITU offices. He had argued that since he works at the company"s headquarters only 25 percent of the time, he should have to pay state income tax only on 25 percent of his income.

The Appeals Court disagreed.

According to the decision, Huckaby, "is the one who chose to accept employment from a New York employer (with advantages of a New York salary and fringe benefits) while maintaining his residence in Tennessee, some 900 miles and a two-hour plane trip distant from his New York employer"s office."

The court did acknowledge that this case could discourage telecommuting.

In his dissent, Judge Robert Smith said, "I am aware of no case in which it has been held, or even argued, that an in-state source of payment for services done outside the state is a constitutionally valid basis for taxing the recipient of the payment."

Huckaby"s New York attorney, Peter Faber, said he will appeal the decision to the U.S. Supreme Court.

"I think it"s very significant if a telecommuter can be taxed by the state where his employer is based on all of his income -- that"s a major problem for telecommuters and the companies employing telecommuters," Faber said.

Marc Violette, spokesman for the state"s assistant solicitor general, Julie Mereson, said, "It was a good decision because it strengthens New York"s ability to tax the earnings of people who work for New York state corporations -- even if they happen to be working out of state for their own convenience."