Allowing employees to work remotely from other states may introduce significant tax and compliance challenges for employers. For example, when employees are located in multiple states, employers may be required to withhold and remit income and payroll taxes in each jurisdiction. Having employees in another state can also establish what’s known as a “nexus.” This is a legal connection that subjects the employer to that state’s tax laws. Once nexus is established, the employer may become liable for a range of state-level taxes, including income, franchise, gross receipts, and sales and use taxes. If you’re considering hiring employees in new states, we can help assess the tax consequences.
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