New York Issues New Audit Guidelines for Employer Withholding on Compensation Paid to Nonresident Employees

The New York Department of Taxation and Finance has recently issued revised Withholding Tax Field Audit Guidelines (“Revised Guidelines”), which establish new audit policies relating to an employer’s obligation to withhold New York income tax from wages (including certain types of deferred compensation) paid to nonresident employees who are assigned to a primary work location outside of New York but who travel to New York on business (“Nonresident Employees”). Among other provisions, the Revised Guidelines establish a “safe harbor” from withholding if a Nonresident Employee is expected to perform services in New York for no more than 14 days in a tax year. The Revised Guidelines are effective immediately and apply to all open audits.