Q. What is Nonresident State Employer Withholding?
Employers that have nexus (tax connection) in multiple U.S. states for payroll purposes have an obligation to withhold state tax as required in those states. Typically withholding is carried out by payroll for employees living (and working) in those states. However, these state regulations extend to employees who don’t live but work in the state (i.e. business travelers) – and this employer obligation can be referred to as non-resident state employer withholding.
Q. Why should I care?
State tax authorities are enforcing non-resident state employer withholding obligations via audit. These audits can and are carried out in respect previous tax years and can result in significant financial penalties.
Q. What can I do about it?
The first step is tracking your mobile employees. Whether you have business travelers or employees on short term assignments outside of their home, you need a way to track and determine for whom, when and to what extent payroll withholding is required for work performed in a non-resident state.
We can help.
At Blackspark, we help customers address nonresident state employer withholding every day. Simply contact us and we’ll be happy to discuss the needs of your organization.