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Originally Posted by Captain Nemo
Gar, quick question for you. I have approximately 2,000 employees working on various engagements throughout the country. These employees perform engagements both in their states of residency, as well as in other states. Ignoring reciprocity arrangements, what are my withholding requirements for pay earned when performing services in a non-resident state. I know every state is different, but I am trying to determine if there is a common "bright line" test that I can apply across the board.
Last week I attended a seminar in DC, and the person who was running it was an old Andersen person who said that it is a "control" issue. I.e., if the services are being controlled from within the non-resident state, then that state can tax the payroll. She claimed that is the position Andersen took after they were sued by the Attorney General in Colorado.
However, after digging into the various state statutes, I don't think it is that simple.
Thoughts?
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My thoughs? I hate payroll. Whenever possible, I recommend outsourcing the damn thing.
It's not that simple, and each state is different. Some are much more agressive than others, and also depending on whether the state budget is having trouble will affect whether you hear from the revenue department or not. Not being a payroll guru, the tax term that you might be searching for is whether your company has "nexus" in that state. Like I said, it varies from state to state. Your employees probably won't notice a difference if they aren't spending much time in each state, but your company might be required to file additional reports in each state that you create nexus. Sometimes, nexus is created by simply driving a company van accross the border, othertimes a more solid presence is needed.
And honestly, if you run a company that employs 2,000 people, delegate that payroll stuff on down and run your company!
