Q. What is Nonresident Withholding?
As an employer, if you have employees that work outside of their home state or country, you have an obligation to remit income tax withholding and report wages for the various locations in which they visit and conduct business. Each country and state has its own nonresident withholding regulations and therefore conditions that trigger employer obligations vary by location.
Q. Why should I care?
Penalties for non-compliance are heavy. For example, U.S. states like California and New York have levied penalties upwards of $20 Million to non-compliant corporations. Countries and states rely on nonresident income taxes for revenue, so the risk of audit is increasing and authorities are implementing electronic methods to track your employee movement across borders.
Q. What can I do about it?
Assessing your company’s compliance risk is a good place to start. This may entail requesting reports from your travel management company or analyzing employee travel patterns within your travel and expense management solution. Once you have an idea how many, and which, employees are travelling to high audit risk locations, you may determine the level of financial risk facing your company.
Blackspark’s services can help you get a clear picture of your nonresident withholding and payroll compliance risk. We also implement effective ongoing traveler tracking solutions for our customers, using our proprietary technology and business processes. Contact us to learn more.