I apologize for taking so long to get back to you. I had started an answer and then my computer crashed.
1. My employer will I assume withold the normal Federal taxes based on my salary and the country within which I live in (let's say Colombia) will most likely not tax me since I earn nothing locally and have no bank accounts, etc. For clarification, will my company feel any liability/obligation to inform tax authorities in Colombia or at least research the tax laws there? ANSWER: Your company has good cause to throughly research Columbian tax law. The issue here is that the U.S. does not have a tax treaty. IN the world of international tax, countries tax businesses based on the level of corporate activity that goes on within the country. If your presence after 183 days creates a Nexus or physical presence in Columbia, becasue of the type of activity you are doing there, your company's world wide income, or at least income derived by you, becomes exposed to Columbian corporate taxes. This is why, companies, especially with regard to south american and the carribian, make sure employees do not conduct corporate business longer than certain number of days per country. 60 days here, 30 there, 183 in other places etc. They also watch what kind of work they do. Without tax treaties your company is flying blind. They need to retain Ernst & Yound, KPMG, or PWC to design this assignment for them to provide the least amount of exposure and the best tax situation for you. Your company may even consider establishing a local company to handle just your salary and activities.
2. So even if I am gone for 330+ days out of the year, NYS will still tax me at the full rate? http://swz.salary.com/salarywizard/layouthtmls/swzl_statetaxrate_NY.html. ANSWER: NY will still tax you, and under current law would base the State return on the federal return.
From the NY State web site:
A change of domicile is clear and convincing only when your primary
ties are clearly greater in the new location. When weighing your
primary ties, keep in mind that some ties may weigh more heavily than
others depending on your overall lifestyle. If required by the Tax
Department, it is your responsibility to produce documentation showing
the necessary intention to effect a change of domicile.
If you move to a new location but intend to stay there only for a limited
amount of time (no matter how long), for work, school, or any other
purpose, your domicile does not change.
If your domicile is New York State and you go to a foreign country
because of a business assignment by your employer, or for study,
research, or any other purpose, your domicile does not change unless
you show that you definitely do not intend to return to New York State.
Howver two things happen. When you have been overseas 450 days and meet other requirements you can then be considered non-resident in NY.
Also if you are entitled to the Federal Foreign Earned Income Exclusion, you can also cliam it on the State return. http://www.tax.state.ny.us/pdf/2008/inc/it203i_2008.pdf
Would it be worth it to ask my employer to just change the State I am registered as an employee (i.e. Texas or Nevada) to avoid the taxation? If you change your addres with the employer, and do not concurrently change your physical domicile, as described in the references I have provided, it makes no difference; you will still owe taxes to NY.
Foreign Earned Income Exclusion: Answered above.
Clarification: US. contractors and employers hire people overseas, and they still qualify for the foreign earned income exclusion. It is based, under current law, on where you reside when you work.