If you have employees operating in many different states, you need to understand both the rules of the states where you're doing business and the rules for states whose residents you're employing. Some states have entered into "reciprocal agreements" with other states that shift withholding from the employees worksite state to the employee's resident state. But special forms are always needed, posing unique administration challenges. Learn the first steps to confirm whether your employees can claim any beneficial reciprocal agreements and whether the agreement relieves you of any withholding obligations.

Withholding a state's income tax on an employee's wages is only required when the income earned is subject to the state's tax. States vary on when earned amounts are taxable. This usually requires that the employee be a resident of the state, or be a nonresident who derives income from sources in the state. Merely performing some services in a state as an employee will not alone cause the employee to be subject to the state's income tax if the employee's principal place of employment is outside the state. In addition, you will need to determine whether your company has a business nexus in that state that requires withholding, and whether that state has any special rules that allow a de minimis amount of time spent or dollars earned before withholding is required. States tax their residents differently than nonresidents, which poses significant challenges in determining where employees actually reside and just what an employer is accountable for in effecting withholding.

States are aggressively seeking revenues and are finding easy pickings when they spot an employer operating within their state. Employers need to know what states are looking for. What about administration of unemployment insurance, worker's compensation, state disability insurance for a mobile workforce? Do you need to solicit the state's version of the W-4? Do you need to use the state's nonresident claim form or other state payroll forms? Employers who are not aware of all the rules regulating resident and non-resident withholding could be at risk for non-compliance, and a target for a withholding tax audit and possibly under-withholding penalties and interest.

Join BNA and tax expert Jerri LS Langer, J.D., L.L.M., a founding member of Ann Arbor, Michigan-based COKALA Tax Information Reporting Solutions LLC, for this intensive 90-minute discussion that will focus on the administration of a payroll for a multistate workforce which will cover:

• Clarification of state income tax withholding rules
• State documentation requirements for reciprocity, non-resident exemptions, and state versions of W-4
• Changes in unemployment insurance applications and the trend to tighten down on worker's compensation
• When you need to withhold based on employees residencies, not just their worksites
• What counts as "a day" for purposes of determining withholding for the worksite?
• Learn who is a resident and who is a non-resident. Some employees that you have coded as non-residents at a work site, might actually be tax residents in the states where they are working.
• Which states offer de minimis time and dollar thresholds that allow you to avoid having to withhold where the employee is only in the state on a temporary basis?
• How reciprocal state agreements affect multi-state taxation, the right forms needed to claim the benefits and the legal loop holes to watch out for
• What constitutes an employers legal nexus that triggers the requirement for the employer to withhold?
• Non-resident income tax audit red flags for every employer
• Telecommuting: what is at risk?
• If a company begins to withhold nonresident taxes, how will it address the reduction in employees take home pay?

Jerri LS Langer, J.D., L.L.M., COKALA (Co-KAY-La) Tax Information Reporting Solutions LLC

 
Jerri LS Langer, J.D., L.L.M., a founding member of Ann Arbor, Michigan-based COKALA (Co-KAY-La) Tax Information Reporting Solutions LLC, and a nationally recognized information reporting and withholding consultant who provides a wide range of tax advisory services to many Fortune 500 companies internationally. She received her J.D. and L.L.M. in Taxation from the University of Florida College of Law (1982) and is a member of the Florida and Michigan bars. Jerri is a past member of the IRS Commissioners Information Reporting Program Advisory Committee and served IRPAC as its Subcommittee Chair on Legislation and Regulatory Matters. Jerri was the founding Government Relations Chair for the National Association of Tax Reporting and Payroll Management and currently serves on the NATRPM Board.