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A single telecommuter working from home within a state’s borders may trigger income tax nexus for out-of-state employers.

Telecommuting on State Tax Nexus

A single telecommuter working from home within a state’s borders may trigger income tax nexus for out-of-state employers.  This is true even if the out-of-state employer made no sales in the state and even if the employee telecommuted only part time.  Last year’s Bloomberg BNA 2012 Survey of State Tax Departments revealed a marked trend toward this result, with 35 states agreeing that nexus would be established under these circumstances.  Perhaps not coincidentally, recent headlines have shown a trend toward employers cutting back on telecommuting or in some cases banning it outright. While state tax implications have not been directly cited as a reason for so doing, they could certainly be a consideration and arguably should be.  To read more about the telecommuting impact on state tax nexus, please click here.

 

 

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With 20 years of experience, Gary Bingel's expertise focuses on state and local income taxation, and also includes sales and use tax consulting. Gary is Partner-in-Charge of EisnerAmper's State & Local Tax Group.

Paul Bleeg is a Tax Partner responsible for overseeing tax compliance and planning in the firm’s Personal Wealth Advisors Group, as well as authoring tax research memorandums on various individual, partnership, corporate and non-profit issues.