4 ms·

If you work in another state then your subject to their tax jurisdiction. The issue here is you’re not actually setting foot in the other state so it’s looking

by koolba 6y ago

If you work in another state then your subject to their tax jurisdiction. The issue here is you’re not actually setting foot in the other state so it’s looking more like a cash grab. I’d bet the question is gonna hinge on whether the office location of the work has been updated in company records. If your “office” is still on the corporate books in Taxachussets then you’ll have to pay.

strombofulous 6y ago
Why does it matter where you (physically) step foot? I think WFH has proven that crossing the physical of land barriers is no longer required to do much of anything.
- koolba 6y ago
  Because when you walk into some other State’s backyard they have the right to demand a toll. Somewhat related, if you’re on the books as working out of their backyard, they will again demand a toll.
- rlanday 6y ago
  If a Google employee ostensibly works in “the NYC office” but hasn’t set foot in the office in over >6 months (will be like 15 months by the time Google’s asking people to be back in July), lives in another state (e.g. New Jersey, maybe the employee took advantage of the remote work conditions to Florida or Texas)…how long should New York be able to tax this person despite the fact that they don’t live or work in New York? Google’s also not headquartered in New York. Google could move everyone in the computer to e.g. the Seattle or the Austin office (but are currently refusing to do so) if we’re all working remotely anyway.
  - free652 6y ago
    As long as he works for NY office he will pay NY taxes. He would need to ask Google to switch his office's location.
    - ghaff 6y ago
      I assume Google would have to switch his official status which it may not want to do for various reasons. If I lived in NH (which I don't) and wanted to switch my location from an MA office to remote, the company would have to do paperwork to do so.
      - anonAndOn 6y ago
        Also, they might change their current health benefits as those are often priced & administered according specific geographic regions. Maybe not a big deal between MA/NH but certainly if you switched to remote only from a little farther afield.
        rlanday 6y ago
        The health benefits already have to be set up to account for where the employees actually live rather than where we work on paper. E.g. if an employee lives in New Jersey and commutes into New York, either the health insurance has to cover providers in New Jersey or the employee has to see doctors in New York. It doesn’t solve anything to change an entry in a database and pretend the employee is actually somewhere else.
- formercoder 6y ago
  Because you drive on that state’s roads, are protected by its police, etc.
  - deathanatos 6y ago
    These people are not, though, if they're working from home. (I expect that'd be the argument they would make.)
- throwaway0a5e 6y ago
  Because taxes allegedly pay for the government to do things. If you're not setting foot in the state you're not using the infrastructure and services.
  - neltnerb 6y ago
    I guess arguably the state is also creating the conditions for your job to exist (with infrastructure and services that you aren't paying for), but I sure hope that's not a convincing argument enough for income taxes. That's about as literally what corporate taxes should be going to as it gets.
    - tshaddox 6y ago
      If a company in one state wants to employ a remote worker in another state, don't they need to set up a token corporation in that other state for the purposes of that employee's taxes? What marginal value is that state providing in order for that employee to work remotely?
      - snuxoll 6y ago
        Nope, just need to register as a foreign entity.
        neltnerb 6y ago
        That can get pricey, in MA it's $500 a year to register as a foreign entity. Then you need registered agents in each state which could be your employee there but maybe you don't want them to do that. I think you are right about employees. There needs to be some ID associated with state withholdings. I think you are wrong if they are contractors. You just need to send the IRS the 1099 since there is no withholding done on money paid that way. The person receiving it plus the 1099 I send the IRS is enough for the IRS to confirm the income.
        snuxoll 6y ago
- jariel 6y ago
  'Where you set foot' is actually the most important thing, or else we'd all be paying zero taxes in some state while 'not setting foot there'. The most obvious artifact of 'where you set foot' is where you have your residence, and for taxation 'how long you're there per year' actually matters. So if you spend > 1/2 of your waking life in Zone A, but sleep in Zone B ... well, it might make a little bit of sense to have some kind of tax regulation there, or not. Because you get most services like water, roads, garbage, 'healthcare' where you 'reside' it's probably just easier to make it all about residence and that's that. But again, 'residence' is where you 'set foot the most'.
- garmaine 6y ago
  Because the constitution doesn’t allow states to tax interstate commerce.
- Zak 6y ago
  Legal jurisdictions are still driven by geography. Without either physical presence or legal residence in MA, the government of MA has no authority to demand anything from someone in NH. MA could charge an MA-based employer a payroll tax for out of state employees, but has no jurisdiction to charge the employees an income tax. A further legal theory is that it it would step on the federal constitutional power to regulate interstate commerce.
snuxoll 6y ago
This is ultimately what I’m questioning though. If I work for a MA based company, how do they have any claim to a portion of my income when I have no residency status there? States aren’t allowed to tax interstate commerce, after all, and not being a resident there I would have no vote for the state houses that determine tax laws. I live in ID and work remotely for a CA-based company, so I’ve got a personal interest in this if CA ever decided they wanted to pull a similar move. Interested to see what the result would be if this got to the SCOTUS.
- neltnerb 6y ago
  Superficially, it sure seems unjustifiable and I live in MA. I sure hope it's not allowed, I wouldn't want to have to pay income tax for every state in which I have a client that I earn money from. "Massachusetts previously allowed out-of-state residents who worked for Massachusetts-based entities to deduct whatever portion of their income was derived while working from home. In practice, this meant a worker who commuted four days a week but worked from home one day a week could reduce their taxable income by 20 percent." So MA knew what was justifiable, and is now not doing it. Based on this reading if I take my MA incorporated LLC and move to another state I'm still supposed to pay a chunk of income tax to MA? I guess for me it's easy enough to reincorporate in a new state or country, but it's clearly ridiculous to try to grab taxes out of what I'm already paying the place I actually live and the state I actually do work from.
  - lsllc 6y ago
    That's always been the way. If you register your LLC in Delaware or Nevada and live in MA, you still have to register it as a "foreign corporation" and pay the annual fees (which is approx the same as just having an MA registered LLC). And since you're "earning" in MA, yeah you'll have to pay MA taxes on that. And if you have a co-founder in a different state, chances are they'll have to do the same in that state.
    - Hello71 6y ago
      but do you have to pay Delaware or Nevada taxes?

by koolba 6y ago

strombofulous 6y ago

Why does it matter where you (physically) step foot? I think WFH has proven that crossing the physical of land barriers is no longer required to do much of anything.

koolba 6y ago
Because when you walk into some other State’s backyard they have the right to demand a toll. Somewhat related, if you’re on the books as working out of their backyard, they will again demand a toll.
rlanday 6y ago
If a Google employee ostensibly works in “the NYC office” but hasn’t set foot in the office in over >6 months (will be like 15 months by the time Google’s asking people to be back in July), lives in another state (e.g. New Jersey, maybe the employee took advantage of the remote work conditions to Florida or Texas)…how long should New York be able to tax this person despite the fact that they don’t live or work in New York? Google’s also not headquartered in New York. Google could move everyone in the computer to e.g. the Seattle or the Austin office (but are currently refusing to do so) if we’re all working remotely anyway.
- free652 6y ago
  As long as he works for NY office he will pay NY taxes. He would need to ask Google to switch his office's location.
  - ghaff 6y ago
    I assume Google would have to switch his official status which it may not want to do for various reasons. If I lived in NH (which I don't) and wanted to switch my location from an MA office to remote, the company would have to do paperwork to do so.
    - anonAndOn 6y ago
      Also, they might change their current health benefits as those are often priced & administered according specific geographic regions. Maybe not a big deal between MA/NH but certainly if you switched to remote only from a little farther afield.
      - rlanday 6y ago
        The health benefits already have to be set up to account for where the employees actually live rather than where we work on paper. E.g. if an employee lives in New Jersey and commutes into New York, either the health insurance has to cover providers in New Jersey or the employee has to see doctors in New York. It doesn’t solve anything to change an entry in a database and pretend the employee is actually somewhere else.
formercoder 6y ago
Because you drive on that state’s roads, are protected by its police, etc.
- deathanatos 6y ago
  These people are not, though, if they're working from home. (I expect that'd be the argument they would make.)
throwaway0a5e 6y ago
Because taxes allegedly pay for the government to do things. If you're not setting foot in the state you're not using the infrastructure and services.
- neltnerb 6y ago
  I guess arguably the state is also creating the conditions for your job to exist (with infrastructure and services that you aren't paying for), but I sure hope that's not a convincing argument enough for income taxes. That's about as literally what corporate taxes should be going to as it gets.
  - tshaddox 6y ago
    If a company in one state wants to employ a remote worker in another state, don't they need to set up a token corporation in that other state for the purposes of that employee's taxes? What marginal value is that state providing in order for that employee to work remotely?
    - snuxoll 6y ago
      Nope, just need to register as a foreign entity.
      - neltnerb 6y ago
        That can get pricey, in MA it's $500 a year to register as a foreign entity. Then you need registered agents in each state which could be your employee there but maybe you don't want them to do that. I think you are right about employees. There needs to be some ID associated with state withholdings. I think you are wrong if they are contractors. You just need to send the IRS the 1099 since there is no withholding done on money paid that way. The person receiving it plus the 1099 I send the IRS is enough for the IRS to confirm the income.
        snuxoll 6y ago
jariel 6y ago
'Where you set foot' is actually the most important thing, or else we'd all be paying zero taxes in some state while 'not setting foot there'. The most obvious artifact of 'where you set foot' is where you have your residence, and for taxation 'how long you're there per year' actually matters. So if you spend > 1/2 of your waking life in Zone A, but sleep in Zone B ... well, it might make a little bit of sense to have some kind of tax regulation there, or not. Because you get most services like water, roads, garbage, 'healthcare' where you 'reside' it's probably just easier to make it all about residence and that's that. But again, 'residence' is where you 'set foot the most'.
garmaine 6y ago
Because the constitution doesn’t allow states to tax interstate commerce.
Zak 6y ago
Legal jurisdictions are still driven by geography. Without either physical presence or legal residence in MA, the government of MA has no authority to demand anything from someone in NH. MA could charge an MA-based employer a payroll tax for out of state employees, but has no jurisdiction to charge the employees an income tax. A further legal theory is that it it would step on the federal constitutional power to regulate interstate commerce.

snuxoll 6y ago

This is ultimately what I’m questioning though. If I work for a MA based company, how do they have any claim to a portion of my income when I have no residency status there? States aren’t allowed to tax interstate commerce, after all, and not being a resident there I would have no vote for the state houses that determine tax laws. I live in ID and work remotely for a CA-based company, so I’ve got a personal interest in this if CA ever decided they wanted to pull a similar move. Interested to see what the result would be if this got to the SCOTUS.

neltnerb 6y ago
Superficially, it sure seems unjustifiable and I live in MA. I sure hope it's not allowed, I wouldn't want to have to pay income tax for every state in which I have a client that I earn money from. "Massachusetts previously allowed out-of-state residents who worked for Massachusetts-based entities to deduct whatever portion of their income was derived while working from home. In practice, this meant a worker who commuted four days a week but worked from home one day a week could reduce their taxable income by 20 percent." So MA knew what was justifiable, and is now not doing it. Based on this reading if I take my MA incorporated LLC and move to another state I'm still supposed to pay a chunk of income tax to MA? I guess for me it's easy enough to reincorporate in a new state or country, but it's clearly ridiculous to try to grab taxes out of what I'm already paying the place I actually live and the state I actually do work from.
- lsllc 6y ago
  That's always been the way. If you register your LLC in Delaware or Nevada and live in MA, you still have to register it as a "foreign corporation" and pay the annual fees (which is approx the same as just having an MA registered LLC). And since you're "earning" in MA, yeah you'll have to pay MA taxes on that. And if you have a co-founder in a different state, chances are they'll have to do the same in that state.
  - Hello71 6y ago
    but do you have to pay Delaware or Nevada taxes?