It is becoming an easy target by states in the recent years, to audit out of state companies’ traveler employees. New York alone increased its tax collections through an audit in the last several years by tens of millions of dollars, and the numbers grow exponentially. A large number
of the largest companies in the US has formed a coalition (theWorkforce Coalition) to try and pass a federal law to minimize their state tax withholding, and to transfer the non-compliance penalties from the employer to the employee. One of the arguments is that complying with so many different tax rules is extremely expensive and tracking employees whereabouts, in order to comply with states’ withholding requirements is impossible. Today, the only way, so the Coalition, to track employees whereabouts is via expense reports and time sheets submitted by the employees. Today, New York is the leading state to stand against this federal legislation, for obvious reasons, and it does not look like the Coalition will succeed in its efforts. So there is an obvious need to (1) enable employers to accurately track employees whereabouts and (2) to do that in a cost-effective way.
So far, it may make some sense (or so I hope) and seems straightforward, but let’s complicate it a bit. Because each state is sovereign to adopt its own rules, some states allow non-resident taxpayers a threshold until reaching of which, no tax is imposed.