The Bloomberg BNA Payroll Library gives you reliable, up-to-date guidance and analysis in every area of payroll administration and compliance, and includes hundreds of interactive forms and links...
The number of states where certain types of telecommuting triggers nexus has increased slightly since 2014, according to a Bloomberg BNA survey.
The 15th annual Survey of State Tax Departments, released April 24, 2015, by Bloomberg BNA's Tax Management and Accounting Division, addressed whether any of three types of telecommuting would trigger nexus in the surveyed states.
Massachusetts replied that nexus would arise from a telecommuting employee who performed back-office administrative business functions, such as payroll, as opposed to direct customer service or other activities directly related to the employer's commercial business activities, increasing to 38 in 2015 from 37 in 2014 the number of jurisdictions that said such telecommuting triggers nexus.
Massachusetts also increased to 37 in 2015 from 36 in 2014 the number of jurisdictions that replied that a telecommuting employee who performs product-development functions such as computer coding would trigger nexus.
A telecommuting employee who performs nonsolicitation activities would create nexus in 38 states in 2015, unchanged from 2014, the survey said. Massachusetts replied in 2015 that such telecommuting triggers nexus in all instances, which is a change from its 2014 response that telecommuting triggers nexus in some instances.
Forty-five states responded to the income-tax portion of the survey. New York declined to respond because doing so would be premature given that it has not completed the corporate tax reform it enacted in 2014, it said.
At the heart of multistate tax and out-of-state authority issues is nexus, which generally means the physical contact that must exist between an employer and a state before taxes may be levied.
A company deemed to have nexus must register with the state and pay any corporate, sales, excise and employment taxes within the state.
Because state opinions vary on what triggers nexus, the survey was conducted to clarify state tax-department positions on certain employment-related activities or relationships.
Employees attending meetings for no more than 14 days may cause nexus in 17 jurisdictions, down from 19 jurisdictions in 2014, the 2015 survey said. The District of Columbia no longer considers meeting attendance to create nexus, it said.
Seven states said that out-of-state employees attending a seminar within the state is a nexus-creating activity, and 40 of the responding jurisdictions said that out-of-state employees conducting a training course, seminar or lecture twice a year is a nexus-creating activity, with Illinois and Massachusetts joining the 38 states that in 2014 said such activity created nexus.
Conducting job fairs, hiring events or other recruitment activities may cause income tax nexus in 21 states in 2015, unchanged from 2014, the survey said. Thirty-seven states said nexus may occur from having employees hire, supervise or train other employees within their borders, also unchanged from 2014.
Preparing product displays is a nexus-creating activity in 34 states, including Utah as of 2015. Handling customer complaints creates nexus in 43 jurisdictions and providing shipping information creates nexus in 28 states.
The Mobile Workforce State Income Tax Simplification Act of 2015 (S.B. 386) was introduced Feb. 5, 2015, by Sen. John Thune (R-S.D.) and referred to the Finance Committee.
The measure would limit the number of states that could tax the wages of a nonresident employee to two: the state where the employee resides and the state where the employee physically performs employment duties for more than 30 days in a year.
The bill would not override state provisions that allow individuals “to conduct greater activities without the imposition of tax.” The bill would establish that a state may assess income tax and employment taxes on wages of those who were physically present in-state for business purposes for at least 15 days or for a state-specified time period of more than 15 days.
How states treat nonresident employees who temporarily work within their jurisdiction varies.
Generally, employers are to withhold tax on wages earned by nonresident employees regardless of how many days they spend in the state; however, many states have thresholds on the amount of time that must be spent or money earned by the nonresident employee within their jurisdiction, and in many states, a nonresident employee may technically be subject to tax on the first day of in-state travel.
For example, employers in New York are not penalized by the state for failing to withhold state taxes on wages paid to nonresident employees performing services in New York if the employees work no more than 14 days in the state, are assigned to a primary work location outside the state and their compensation is not a form of excepted compensation.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)