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.