Expert: Shirley McAllister, CPP, PHR - 9/15/2010

Question
QUESTION: Hi,
I am hoping you can help answer a question about remote workers.  We are located in Washington State and have work sites in Washington and Oregon.  We have an employee that lives and works in Washington State that will be moving to New Mexico and work remotely for an extended period of time. Will we need to register with New Mexico for State Income Tax withholding, SUI and Workmans Comp?  This is our first employee to do this.
Thank you,
Julie

ANSWER: Washington State does not have a reciprocal agreement with New Mexico so you will need to set up state income tax accounts with New Mexico, SUTA (state unemployment accounts), and probably workman's comp accounts unless you have worker's comp through a private company and they will cover New Mexico. The Washington state worker's comp does not have a reciprocal agreement with New Mexico on Worker's comp either.

Washington State has reciprocal worker's comp agreements with 8 states. Idaho, Montana, Nevada, North Dakota, South Dakota, Oregon, Utah and Wyoming. In those states the worker's comp can still be covered for temporary out of state worker's by Washington.

Taxes are different Washington state has no reciprocal tax agreements with any states.


http://www.tax.newmexico.gov/Businesses/New-and-Small-Business-Education-Center/
Here is the link to register your business with the New Mexico Tax Agency. It has information for new business's to New Mexico.

Workers' Compensation Telephone #

800-255-7965

http://www.dws.state.nm.us/dws-uitax.html
Unemployment Insurance Bureau in New Mexico

Hope this helps...and good luck to you.

Shirley









---------- FOLLOW-UP ----------

QUESTION: Hi Shirley,
Thank you for your answer.  Now it looks like we will have another remote worker or telecommuter that will be moving to Georgia. Am I correct that it looks like you need to check with each state that a telecommuter lives in to see if that creates a business nexus?  Do you have any links to tax law or regulations about telecommuter?

Answer
H.R.2600: Telecommuter Tax Fairness Act of 2009 - which would help this problem has been introduced in congress 3 times now.
2005, 2007 and 2009. I know it has not passed the first two times. It was introduced again May 2009 but has been languishing in committee. I have not heard that it has passed.

Until it does pass if that does happen you would need to check the regulations of each state. Usually you can check the Department of Employment of that state:

This is a list of all states and their labor office contact information.

http://www.dol.gov/whd/contacts/state_of.htm


Here is a pretty good article written on telecommuting:

http://www.aicpa.org/Publications/TaxAdviser/2010/feb/Pages/APractitionersGuidet


Shirley