Multistate telecommuting offers pitfalls in taxes, unemployment
Q&A with Charlie Plumbpublished in The Oklahoman | July 9, 2013
While many employers are aware of the general benefits of permitting employees to telecommute – the ability to retain and recruit valuable employees, reduce travel time and other expenses, and boost morale, just to name a few – many are unaware of the liabilities associated with allowing employees to work from another state.
“Many employers are unaware the mere presence (or residence) of an out-of-state worker may create additional corporate business tax liability for them in the majority of U.S. states,” said Plumb. He cited a 2010 case in which a New Jersey court held that an out-of-state employer owed New Jersey corporate business taxes because of the company’s “nexus” with the state, despite the fact the company had no business operations or connections with the state, other than an employee who worked for the company from her home in New Jersey.
Plumb also reminded employers that unemployment insurance payments should be remitted to the state in which the telecommuters physically do their work – not the state in which the company is located – because claims for unemployment are generally filed in the state in which the employee works.