A consultant lives in Florida providing servies to client's nation-wide. Travel to the client's various state locations are nominal, and is generally proposal related. The work is performed in the client's Florida home office and by telephone. Is any of the income on these engagements taxable to those states that tax all source income? The client also has the opportunity to become an employee of an Indiana firm working on a telecommuting basis from her home in Florida, traveling to Indiana only routinely. The paychecks would come from the Indiana office. Again, the client would be working with client's nation-wide. Most out of state client visits would be pre-engagement, but there might be some on-site client work. Would the client have any Indiana source income?
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nexus-source
Your consultant client appears to not have nexus with any state except Florida, therefore I would treat all income as taxable Florida Income (no state individual income tax). The Indiana company should also not withhold Indiana taxes as the employee would be a Florida employee not working in Indiana. my 2¢±¼ -
That's what I'm hoping. However, I read a summary of a New York Court of Appeals case where the ruling was all state income is taxable even if the employee is not physically present the entire time. It involved programmer employed with a Queens based organization. He lived telecommuted from a non-tax state, but did spend 25% of his time in the New York offices. He reported 25% of his income to New York, but lost the case and an appeal. This situation is similar to the second question I asked, except the services would be provided to client companies of the employer in multi-state locations. Whereas, the programmer provided services to his employer in New York.Originally posted by OldJackComment
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The issue for a nonresident is where the services are being rendered. There are numerous employees around the country who work out of a home office for employers located in another state. The employee is subject to state tax only in the state in which the employee is a resident, since the employee's work location is that home office. Even if clients are located around the country, you look at where the work is actually being performed.
For example, as a tax preparer, do you file as a nonresident for each of your out of state clients? Of course not. Your out of state clients mail their return to you, you prepare the return in your office, and mail the completed return back to them. On the other hand, if you physically drove to your client's home in another state, did the return at their home, collected your fee, and then drove back home, you would have to file a nonresident return for the state you performed the services in, assuming you made enough to exceed the nonresident filing requirements for that state.Comment
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Nexus
If you are traveling and performing services @ the customer's place of business when do you get nexus. It is still being argued... If you take a product to another state, it you install or maintain a product in that state, if you provide maintenance agreements to those states, etc- assuming providing means you provide the services by physically going to that state----I think all of those have been determined to give you nexus and tax reporting in other states. States consider it found money if they can find new taxpayers who do not realize they have nexus.Comment
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In some states you even have nexus in soliciting business and not only if physically present. If there is a lot of printed marketing material present in that state some states view it as having nexus. At least for sales tax purposes.
Some years ago I researched almost half the states for sales tax purposes and was shocked how easily you can have nexus. But as said before, this was for sales tax purposes only and I don't know if there is a difference for state tax purpose.Comment
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Zee
NYS has just released a new advisory on non-residents & the convenience of the employer apropos to your post. I'll give you the info - it may be helpful to you.
New York Enrolled AgentComment
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