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1 edit | reply to GlobalMind
Re: like or not, this is the deal ... yup, the key here is the combination of state rules and business organization. Not all states have source income taxes, so nonresidents employed by a company organized in an ordinary tax state have no problems - they pay tax only to their home state no matter where they earned it. (And if, like you, they live in a no-tax state, they pay no tax.) But if the company is organized in a source-tax state, then they need to carefully reorganize their business so non-resident employees have a "source" of income from outside the parent corp. state.
And then you get into all the various forms of organization. As previously noted, "contract" workers have a whole different set of issues to deal with (including the legal questions of whether they are truly independent contractors or actually employees but incorrectly assigned as non-employees), and then there are partnerships. If the partnership has a multi-state presence (think law firms and accounting firms with NYC and LA offices...), the general partners owe will income tax to several states in proportion to the total partnership income from those states even if they work only in one of the offices.
It is wild, and as I said before, the problem here is that the company lawyers and accountants appear to have had no clue of the business/tax environment they were operating in. It's too bad they created so much trouble for the poor schmuck in TN. He deserved better from his employer.
dw |
