Can a taxing state legally tax the income of someone living in a non-income taxing state?

Oldman answered one year ago …

my answer to the question you raise is based upon personal experience with some Western states' energy trusts; Yes, if you hold the securities/note/loan/bond; i.e., the income generating rights, they can and will tax you, regardless of your domicile/residency. Whether they can collect it or not depends on your current domicile's "Reciprocity" arrangements: i.e., if your state has agreed to share tax info and collections with one or more other tax authorities. Secondly, once a taxing authority bases its charges on a percentage of U.S. federal AGI or tax liability, then that is their "basis" for revenue actions.

The only benefit I can see in resolving this issue, is divestiture, payment of the other state's tax (and being able to deduct that on your federal return in addition to any current local income taxes) and/or paying a tax professional who is knowledgable to try to figure a way out of the mess.

My own solution was to divest and ignore the tax payment request, because the securities were in an IRA, which by the laws of the state I was living in at the time, and the Federal code, could not be taxed at the recipient level (In other words, the states trying to claim the tax needed to get it from the payer, not the payee.)