3 ms·

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

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
      I live in ID and work remotely for a CA-based company. I get paid from the same EIN that people working in the CA office do. Yes, they had to file as a foreign entity and that also means a registered agent in the state, but they also have to pay into Idaho’s unemployment insurance for my wages as well which costs them more than that.
      - neltnerb 6y ago
        Makes sense. You're an employee. If you were a contractor they wouldn't have to do that stuff and you'd get taxed at a weird rate and have to report it yourself. But you'd have to actually be a contractor for that, if you're truly an employee then it is what it is. So it sounds like the workaround is that said MA company has to start a NH foreign entity, which I assume is all but free, and have that foreign entity pay the employees. That way they're "working remote" for a NH entity and sidestep all this nonsense. But it's fair to say... why bother, just go back to using the rules you clearly understood to be fair which you were using earlier this year.
- lsllc 6y ago
  This actually is a big issue. If you have an employee in a particular state, as a company you are now considered to have a presence in that state and would now be required to pay sales tax on sales to customers in that state (I think this used to be only sales people, but now is any employee). There are a decent number of companies that will let employees work from no-sales-tax states (FL, TX, NV, NH etc) without question, but for other states, if they do much business there but don't already have a "presence" there, then they'll have to start paying sales tax to that state on any business they do there.
  - lotsofpulp 6y ago
    This is not true as of this court decision: https://en.wikipedia.org/wiki/South_Dakota_v._Wayfair,_Inc https://en.wikipedia.org/wiki/South_Dakota_v._Wayfair,_Inc. Sales tax needs to be paid regardless of presence.
    - lsllc 6y ago
      Wow, that's interesting thank you! I guess that opens things up for remote workers if there's now no "penalty" to go to a state where your company previously had no presence.

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
    I live in ID and work remotely for a CA-based company. I get paid from the same EIN that people working in the CA office do. Yes, they had to file as a foreign entity and that also means a registered agent in the state, but they also have to pay into Idaho’s unemployment insurance for my wages as well which costs them more than that.
    - neltnerb 6y ago
      Makes sense. You're an employee. If you were a contractor they wouldn't have to do that stuff and you'd get taxed at a weird rate and have to report it yourself. But you'd have to actually be a contractor for that, if you're truly an employee then it is what it is. So it sounds like the workaround is that said MA company has to start a NH foreign entity, which I assume is all but free, and have that foreign entity pay the employees. That way they're "working remote" for a NH entity and sidestep all this nonsense. But it's fair to say... why bother, just go back to using the rules you clearly understood to be fair which you were using earlier this year.
lsllc 6y ago
This actually is a big issue. If you have an employee in a particular state, as a company you are now considered to have a presence in that state and would now be required to pay sales tax on sales to customers in that state (I think this used to be only sales people, but now is any employee). There are a decent number of companies that will let employees work from no-sales-tax states (FL, TX, NV, NH etc) without question, but for other states, if they do much business there but don't already have a "presence" there, then they'll have to start paying sales tax to that state on any business they do there.
- lotsofpulp 6y ago
  This is not true as of this court decision: https://en.wikipedia.org/wiki/South_Dakota_v._Wayfair,_Inc https://en.wikipedia.org/wiki/South_Dakota_v._Wayfair,_Inc. Sales tax needs to be paid regardless of presence.
  - lsllc 6y ago
    Wow, that's interesting thank you! I guess that opens things up for remote workers if there's now no "penalty" to go to a state where your company previously had no presence.