Multi-State Tax Issues for Payroll 2024

There are significant compliance issues for employers when employees cross state lines in the course of employment. Frequently, multi-state employment issues arise when the employer has business locations in more than one state. However, issues also arise when individual employees perform services in more than one state, live in one state and work in another, move from one state to another, or telecommute across state lines.

Compliance issues directly related to payroll include identification of the states for which the business is liable for the collection and payment of income tax, and compliance with the rules for each state regarding tax collection, payment, and reporting. In addition, special rules are used to establish the state that is to receive the unemployment tax for a particular employee. A very significant non-payroll issue is whether the employment creates nexus, i.e. a business presence, within a particular state and whether the employer is subject to that state’s income, franchise, sales and use, or other state business taxes imposed by the state and the related apportionment issues.

In this fast-paced and detailed webinar, attendees will receive crucial information and resources to identify and help resolve multi-state payroll tax issues.

The creation of a nexus in a new state or local tax jurisdiction can lead to tax and compliance issues, including liabilities for business income, franchise, property, sales, and employment taxes. Nexus may be unintentionally established when employees work in a taxing jurisdiction. Failing to properly withhold or pay taxes can result in fines, penalties, and potential personal liability for employer officers and managers. Correcting these errors can be costly and time-consuming. Employers must ensure accurate documentation for employee withholding to avoid penalties. This webinar will cover necessary documentation and strategies to prevent issues and penalties.

• Understand nexus and how employment within a state may create a nexus for an employer
• Understand the payroll tax and compliance implications of conducting business within a state
• Determine which state(s) to withhold for when employees work in multiple states under the general rule
• Determine which state(s) to withhold for when states that have reciprocal agreements or no state income tax are involved
• Know when state or local withholding certificates or certificates of non-residency are required
• Determine which state is the state unemployment tax state when an employee works in more than one state
• Understand that state rules differ concerning taxable income, withholding thresholds, wage reporting, and fringe benefits
• Learn how to avoid failure to withhold penalties.

• Reciprocal agreements and how they affect state income tax withholding
• Employee domicile and tax residency
• State and local withholding certificates - when the federal W-4 isn't enough
• How different states deal differently with supplemental wages
• How to handle state unemployment when employees work in several states
• SUTA dumping - what it is and how to avoid this penalty trap
• Which states get withholding tax proceeds when employees work in multiple states
• Fringe benefit taxation - which states differ from federal rules
• The payroll tax implications of conducting business in a state
• How to determine the states for which you must withhold tax
• Special rules for military spouses
• Telecommuting

As businesses expand operations across multiple states, they encounter complex multi-state tax issues. These challenges include navigating various state tax regulations, determining tax liabilities, and ensuring compliance with state-specific payroll requirements. With differing rules for income, franchise, property, sales, and employment taxes, companies must carefully manage tax obligations to avoid costly penalties and legal complications.