In what appears to be a significant change in the taxing landscape for long-distance telecommuters—those who work for a company legally based in a state other then the one they live in (and it seems to me I know a few of those types)—the state of New York says it can tax all the income earned by anyone from companies based there, no matter where they live. This is the result of a 4-3 decision by NY's Court of Appeals. Although the state of Tennessee, where the gentleman at issue in the case resides, does not tax wages, I imagine this will create some interesting possible conflicts for those who live in states that do tax wages and work for NY-based companies.
One of the dissenting judges, according to the Associated Press' report,
argued that the basis of the majority's decision that all income is taxable is "that the commissioner says it is … The majority cites no authority at all, and offers no persuasive reason, in support of this new interpretation."
NOTE: This entry edited since first posting in recognition of Tennessee's lack of an income tax on wages. [See comment thread.]