As employers are settling into the post-pandemic “new normal,” many offices look much different than they did in 2020. Employers have implemented significant changes in workforce arrangements, with many employees working remotely from a home office or a variety of locations including in other states. Some jobs are now 100% remote on a permanent basis, and some are hybrid combining days of remote work with other days in the office. Remote work arrangements can help employers attract and retain talent, but employers must navigate the compliance and legal hazards that arise when remote work crosses state lines.
Tax Implications
If employees are working remotely in different states, state corporate or other business activity taxes may apply – even if only a single employee is working in that state. In effect, if an employer did not previously have a recognized office in a state, but one employee starts working from that location, new registration requirements and tax liabilities may be triggered. It may be necessary to register with the secretary of state and relevant tax authorities, provide a registered agent address, and pay corporate and business activity taxes, sales taxes, and employment taxes, including employee withholding. There are often state and local licenses and business permits, as well.
Labor Laws and State Disability Programs
Employees who regularly work from home in a different state will likely be subject to the local employment laws of that state, including...
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