One consequence of the long-term shift toward a service-based economy is a change in how states determine the corporate income tax, sales tax, and employee payroll withholding requirements for companies that are active in multiple states. The lack of a consistent nationwide approach can create complexities for companies that have facilities, sales, or personnel in multiple jurisdictions.
Further, the rise in telecommuting during the COVID-19 pandemic has focused additional attention on the issue. So far, only a handful of states have issued specific guidance regarding the tax questions that arise when a company’s employees work remotely from other states. Telecommuting employees can create income tax, sales tax, and payroll withholding issues for their employers. (more…)