ROGERS:

Okay, I think we can go ahead and get started. Good morning, everyone. Welcome to our new regulatory webinar series. This one today is on multi-state tax and the changes working from home. My name is Judy Rogers. I’m the VP of marketing for tax and Compliance for Asure, and I’m really excited for, for today’s topics. We have a great group of presenters and and our content is really, is really good as well, and I’m looking forward to sharing it with you. I’m gonna introduce our, our panel. We have Summer Poletti, who is our expert host. She’s our VP of sales, for sure, tax and Compliance. We also have Kelly Gonzalez. Kelly is our tax and compliance manager. And we also have Isaac Dallago. He is from Symmetry Software. And we have Greg Shine also from Symmetry Software. And we we’re very excited to get this going here. A couple of housekeeping items. Everyone will be on mute during the webinar. We’ll have a q and a session at the end, and you can use the panel to the right to ask your questions. If we don’t get to your questions we will respond to you post webinar. We also will be sending out the webinar, webinar recording on demand, and give us a day or so for that. And with that Summer, I’m gonna hand it over to you.

POLETTI:

Awesome, thank you. Well, I appreciate everybody showing up and taking time out of the last day to prep for quarter end filing to join us. Excuse me.

So, so why are we here? Why are we taking a day right before <laugh> quarter end? Multi-State and multi local payroll and tax processing is complicated. And as is everything in 2020, COVID made it harder for a number of reasons. So our goal today is to share some tips on how to manage and work through the nuances of state and local taxes and unemployment insurance, and how to not only process multi-state and multi local if it’s your first time doing so, or if you are anticipating a time in the future where you may be processing multi-state, multi local for the first time. And also, you know, how to manage things with so many payroll tax law changes this year.

Well what is multi-state? So multi-state really basically means that either your service bureau or your in-house payroll department is processing in more than one state. You add locals to that and it becomes a little bit more complicated. So we’re kind of talking about maybe your business has multiple locations that happen to be in other states. What is coming up in 2020 and looks to be a trend in the future are maybe remote employees who live outside of the state where your business is located. So maybe your business doesn’t conduct business in multiple states, but now because of remote employees, you’ve got employees living in other states, and now, now you’re a multi-state employer overnight. So the fun is that the rules vary from state to state, and the regulations are constantly changing and you know, it can be difficult to manage.

So you’re opening up tax obligations, filing requirements, who you pay this tax to and, and are there agreements between neighboring states that you need to take into consideration. So it’s, it’s just a lot of work to manage and maintain compliant. And the, you know, you could be subject to penalties if you don’t do it properly. So you need to figure out which state has taxing authority for unemployment taxes and also withholding taxes. And there are a number of reasons why it might not be as simple as this state in which the employee works or lives. So you have to figure out when the taxes are due, what forms to use, they, your payment schedule, and the way that you file the form that you use may depend on how many employees you have or how much you owe when you’re in a new jurisdiction. You have to figure out how to apply for it. So there’s fun there. And then when remote employees quit, you also have to make a decision to keep that business Id open in case you have more employees in that jurisdiction in the future, or to close it out. So there’s, there’s, there’s lots to consider.

Okay, I’m ready for next slide. So, multi-state payroll issues can be challenging. You know, we say keep you up at night. I feel like that’s totally cliche. However I’ve been working in payroll long enough to know that these are the things that pop you up at like two o’clock in the morning where you go uhoh <laugh> and you know, you need to write down a note or, or you hope you’ll remember in the morning. So yeah, you know, these things can, I suppose, keep you up at night. So figuring out taxation for employees for their payroll is, you know, that’s, there’s, there’s a lot to think of. So what you need to watch for are variables thresholds that need to be discovered. Whether a state even carries a threshold, I’ll use Texas as an example. You can’t even apply for a state ID in Texas until you hit a certain number of wages. So you have to track your wages, you have to report to Texas, and then once you meet that threshold, then Texas gives you an ID number as opposed to other states you’re supposed to apply immediately when you hire an employee in that state. So it’s, it’s just different all over the place.

And you know, employee burnout, we talked about keeping you up at night, you know, managing taxes withholdings is hard and you know, do you have a system that manages it for you or are you working on a spreadsheet? You know, so we’ll talk a little bit about where to start. So, you know, you need to follow IRS and SSA guidance. A lot of states do us the favor of following the irs, you know, with the state of Arizona is nice enough to use the Fed ID number for the state withholding, so you don’t have to get, and remember a new ID number state of California is nice enough to follow the deposit frequency. So whatever frequency you follow when you’re paying to the irs, you do the same to the state of California and other states. So sometimes they make it a little bit easy for you. But it’s different in all states. So you do have to make sure that you research or I’m gonna quote Greg, and, and he says pre-search. So you gotta do your research before <laugh> and make sure you’re not overlooking anything. And then you gotta figure out a way to, to get organized, be it using a system or using a, a big fancy spreadsheet. You know, whatever you need to do to keep organized.

GONZALEZ:

And that’s a great point. Summer I just wanted to jump in here. I’m Kelly, and I will apologize in advance if I sound like I’m underwater. I was having some audio issues. So just to kind of piggyback off of what summer is saying, is that the first thing that you need to decide when you come across especially nowadays with covid-19 around March on the APA listerv, it was becoming a very hot topic. However, we were all just trying to get through first quarter and deal with second quarter new returns and to get everything processed with covid-19 and all of the tax codes that we had to deal with. One thing that has now been extremely present on those listervs is that everybody has employees working remotely. And almost everybody wants to know, how do I tax these people?

What am I supposed to do? And everybody wants a quick answer. Everybody wants to know you know, is there a list, you know, is it the same for every state? Is it the same for, you know, and state withholding? And it’s not? Unfortunately, it’s not. So one thing that I can say is that if you have an employee who is not in your business state, congratulations. You have a new state you get a deal with, that’s bottom line. Depending on establishing your nexus, whether or not you meet the threshold to open an account, you have to find that out. You have to find out whether or not it has a threshold for hours, worked wages do you have a reciprocal agreement? And we’re only talking state withholding right now. I can, I can speak to it, but I’m not I’m not in payroll land anymore, like Greg and I the car, but just payroll related, their list is probably bigger than the state requirements.

So the first thing is you have to to, to determine what do I need to do? Do I need to register? Do I need a VP to sign the registration? How do I register? What am I registering for? Do they have state withholding well cost to state employment, but more than likely they have state employment? Is there a local I need to look at? Is there multiple LO locals I need to look at? Do I have to talk about assessments? So once you finally figure all of that out, just for the setup and getting that completed, getting your ID numbers, getting your rate for your site and employment, now you need to figure out what you’re doing with this tax. And that’s a whole nother list of, of items that you need to look at. For instance, if you decide and you withhold taxes, you have to send them somewhere.

Now we’ve gotta decide where do I send the taxes? When do I send the taxes? How do I send the taxes? Is it a check? Is it an EFT payment? Is it ACH credit? Is it ACH debit? So adding just the state and withholding taxes for employee, there are so many more items that you have to look at and make sure that you’re doing it correctly to be in compliance. Not to scare everybody, even though we’re going into October in the Halloween period, but it’s a lot bigger than just getting an ID number. So some of the best practices that summer has already spoken to is to follow the guidance on how to set up, but that may not be the only way to set up an employee for taxes. There’s reciprocal agreements that you need to look at whether or not there’s even state withholding in that state, because we have the states that don’t have that.

But that doesn’t mean that you don’t collect, you still need to maybe have a sui that you have to collect or maybe even a local or an assessment that you need to look at. One thing that you can do is you can go on the websites, you can call the agencies, you can try to get all that information yourself or you can look for, you know, service bureaus or tax engines that actually do all of this for you. But that is one thing that you definitely have to look at. One of the things that many people overlook is when you actually move sometimes people, you know, especially now, if they can go to another state to do business in, now, you need to, you know, look at your other employees and make sure that you’re registered for all the states that you have to go into. So we’ll be going into a lot of these details more so in in the next couple slides. But we just kinda wanna talk about, you know, all of the things that you need to look at and all the variables that come into play. So some things to look at. I don’t know if there’s another slide on this. I’m sorry, Brittany.

Okay. So some of the tips that we have and I believe for the state regulations, just talking about income ho withholding, I’m not talking about Sue or the locals, is you really need to find out what tax agencies are relevant for your employee. Like I previously stated is there withholding? Is there an unemployment? Is there local tax school district, any type of eit lst, especially when you get to some of the states that have a lot of local, really need to, to do your as Greg’s fun word that I learned yesterday that I’m gonna probably copyright and use for the rest of my life, which is pre you really need to get in there and, and do your homework and all of this. Review your website. Do not wait until the week before you need to file taxes because you’re not gonna have time registrations for some agencies.

You can do online some of take a month or so to get all the paperwork back and forth. So you really wanna get on this as fast as possible. One item and it’s relevant where prior to Covid-19 and we had a lot more businesses working remotely or allowing employees to work remotely, you pretty much restricted your hiring to workers in your state. And that still may be a possibility depending on your pool of employees that you’re looking for. But also if you are in a growth mode and you’re opening your hiring pool, you might wanna just make sure that you also grow your tax and payroll departments. Reason being, for an example, if you hire two employees in Pennsylvania, you’re gonna have withholding and your gonna have unemployment. However, those two employees could also be in, you know, two different locals, an eip, an lst, and you also have, maybe if you’ve gotta pay something with the school district, you could potentially increase your filings to six or more. So just hiring two employees and then having six filings, you know, sometimes it’s always apples to

POLETTI:

Awesome. Well tag someone else in so that Kelly can have a little sip of water here. So Kelly talked just a, a tiny bit about locals, and I wanna tag in Isaac from symmetry who can give us his expert take on local taxes.

DALLAGO:

Hello everyone, this is Isaac Dallago with Symmetry Software. So when we talk about locals, I think it’s important to understand the relationship that Symmetry has had with ptm for the last decade. I think this mostly came about when Pennsylvania came out with the Act 32 and the PSD codes or political subdivision codes, and many of our largest customers came to us and said, you know, you’re a technology company and you’ve got this very powerful tax engine. How can you assist with local taxes, rates and jurisdictions? Well, we specialize in withholding tax solutions, so you don’t have to. And knowing that relationship, there’s a couple of ways that we help with locals. You know, obviously there’s some of the, the things that Summer had already mentioned, the local taxes are paid by possibly the employee, the employer, or both, that can be imposed as a percentage salary or wages or percentage of the federal and state or flat amounts.

So with the challenges, there are 17 states that levie some type of local taxes. There’s nearly 5,000 tax jurisdictions, and I know for just symmetry manages 14,000 taxes and 8,000 of them are local taxes. And there’s about the 17 states, Pennsylvania, Ohio, Kentucky, New York Indiana, Maryland, or I’ll mentioned here. So if you have employees, we have, our approach is very powerful symmetry tax, and I’ll tell you what that is, and then I’m gonna tell you how we we manage that. So some of the pain points of using the state websites, and if you’ve ever had to do this, and if you have it and you’re on the call, I challenge you to go to the state of Pennsylvania and just take two random addresses. You can Google McDonald’s, or just find an address or two in Pennsylvania and just go through the process.

And if you’ve done this and you’re familiar with it and you’re already a pro, well that’s great because most of the time it’s gonna take an employee, even a payroll professional, minimum five minutes. But most of the time it’s gonna take longer. And if you’re not familiar with it and you’re just learning this, it could take you 30 minutes or more. If you’re a payroll pro and you do this every day, then great, then it may take you only five minutes. But there’s still an opportunity cost for time because if you look at it, there’s errors that require you to manually fix them. If you’re doing this manually, and there’s a slow process for onboarding. So let’s say you have a $30 an hour employee processing looking up locals, and they can do it in five minutes, but that’s $2 and 50 cents, and that seems like nothing.

When you think, okay, for $2 50 cents and I get this, all this information, I avoid a penalty. That’s wonderful. But now if you add 40,000 and employees, that’s a hundred thousand dollars in time. So there’s an opportunity cost there of time. So you think about that. Plus, if you’re manually entering, entering this information, you could transpose numbers and it may be incorrect. The manual entry is also included on the W four. For the state of like Pennsylvania, you have to have the Pennsylvania PSD code, which has an independent rate for the resident and work location. So it’ll give the resident rate the work rate and the work code and the resident code. And then the, the pain, the websites are just frustrating when you have to work through them. One of them, if you go to a state website, I always point this out, if you read at the very bottom, there’s a disclaimer saying that the state website aren’t actually correct and true to check with your payroll professionals.

So now what do you do? And then stay in compliance with federal, state and local requirements. So with symmetry, we work with PTM on the front end to determine local taxes, and that’s primarily through two different products. It’s through our Symmetry tax engine and Payroll Point Pro and Payroll Point web services. So kind of in a summary, the tax engine may or may not be something you need would be if a, somebody wanted to develop their own payroll application. So you may not wanna do that right now, or you may currently use symmetry and, and take advantage of that. But I wanna kind of give you the, the knowledge behind it and why the tax engine and where the information is coming from. For payroll point, the tax engine is basically a software development kit that somebody would bolt on their payroll application and they’re gonna just pass things like your wages withholding settings, a resident and work location where that employee lives and works.

And it’s gonna do a gross net calculation and return the calculated US federal, state and local taxes. Now, one of the key features of the tax engine is the local tax or location code service where we compute local withholding amounts. And that’s for the city, the county, the school district, privileged taxes, and the other local jurisdictions. And that’s possible through our location code services. And this is the port part of the next item that I like to discuss, which is the pro and PowerPoint web services. The tax engine also deals with something Kelly had mentioned earlier multi-state reciprocity calculations where we address states withholding taxes and applying the resident state and work state settings and state reciprocity arrangements to the calculation. And all the, also the employer taxes, which Kelly mentioned for the employer cost for food en suda, any other state employer taxes well as applying the successor rules.

So what we did is we took over 32,000 government CH shape files or geok files or tax bound, and we map them out. Most of the state websites only use, in fact, all of them only use zip codes. However, with zip code accuracy, it’s not accurate. And what we do is we take the geo coordinates or LA long coordinates, it’s the same thing that you have GPS in your car, and we get a pinpoint on a map where we determine exactly where that employee lives based on the resident and work location. Then what we do is we do the address normalization of validation to make sure that we have the proper address. So you wanna start with the correct address in the beginning. And a nice side effect is your employees will actually get their W two s at the end of the year, but by starting with a precise address with a address normalization, we’re gonna check the street name, the spelling of the street, spelling of the city, is it the correct zip code?

If it’s not correct, we’re gonna correct it for you. Once we do that, we pinpoint, we’ll get the LA line coordinates, pinpoint that employee on a map. We take it from a five digit to a nine digit zip code because the last four digits are rooftop accuracy. Then we pass that pinpoint through our very powerful tax engine through where we’re managing over 8,000 taxes for locals, and then give you back all the local taxes rates and jurisdictions. But we’re doing it at a rate of 5,000 employees in seven minutes. So if you think about it, the time that it takes to look at one employee, we can manage 5,000 employees. So where the relationship with, with PTM is that because they know all the agencies and the tax roles that it’s required to submit those in a timely fashion, we’re helping folks on the front end with letting you know what taxes for local taxes rates and jurisdictions apply. And we give you the employer’s responsibility, the type of tax and the tax rate or the employee’s responsibility type of tax or tax rate. Kelly also mentioned a few of them earlier and like e I t S I T and we take care of all that for you. And then what happens is then PTM manages it on the back end for you, and then I’ll continue. So I will introduce my colleague and payroll professional would be Greg Shine.

SHINE:

Okay, everybody, thank you very, very much for, for being here today. So one of the things that Isaac was talking about, mostly withholding an e IT taxes related to locals. State unemployment tax presents its own set of unique characteristics and requirements. And when you think about covid, what covid basically did was take all of your work site locations, maybe your brick and mortar stores, and blew them out into the home addresses. So now all of a sudden where you might have had, you know, complete geographic and payroll nexus at a single brick and mortar store, now you’ve got questions around nexus implications, especially in local taxes. You know, am I required to withhold? Is this employee now working from home? What are the implications for that? And we mentioned you know, the presurg I think most payroll teams started in March when we started to see these home deployments doing the analysis of that work and home address.

And it’s key for the local taxes, as Isaac mentioned, but you’re also gonna have some implications for perhaps unemployment, right? So if I was always an employee who lived in Pennsylvania and was performing work across the border in Ohio, there was, we, we knew how to handle that. Now do I have a sui obligation based on that employee changing work sites? And that’s in effect what covid has done. So you know, it’s, it’s very, very challenging. Was challenging before covid and has probably gotten more so simply because we’re going into all of these newer jurisdictions and asking these questions. So what is the what are some other challenges related to, you know, sui tax calculations? You know everybody knows their sui rates vary based on their experience rating, what the new customer rate or the new withholding or new employer rate may be assigned at that state.

So you’re always in charge of staying on top of that business and finding out about it. Every year the state should be notifying you, providing your new experience rating, and it’s a challenge to get those updated. So, you know, a number of things that that can happen is you can do bulk updates with the agencies and some service providers will help you maintain that as opposed to waiting for the paper notification. So, you know, that sui tax rate always a challenge, okay? So state criteria differs and they have free reign to do what they want. So we, we like things in payroll when they follow that natural flow, the fed sets, the standard states, follow locals, follow states, municipals, follow local, et cetera, et cetera. The states can actually do their own thing and break away from what those federal requirements might be.

So they’re assigning their own rates, they’re managing that. And now it’s a whole new dynamic because it’s not necessarily just in fact in the withholding or what sui reportable wages, but you’ve gotta manage each one of those at the state level. So you know, the formula for many moving parts in this, the multi-state regulations they change every year. Then add that covid bend, what is the difference now for my sui withholding based on where that employee is? Have I tripped nexus? Do I now have a new sui obligation? So all kinds of things are happening in the state unemployment arena as well. And then one last point very, very interesting to watch as the states become creative in the way that they’re administering state unemployment. So this year alone, symmetry has noted 13 suda and sui taxable updates. These are new types of taxes.

We usually see them noted as surcharges that are being added to your suda and sui returns. So watch out for those things. We’ve seen activity in Idaho, Kentucky, Minnesota, Montana, and Maine. And all of these taxes have very creative names associated with them. Job training tax is one we’ve always heard about or, or seen. Then, you know, workforce development also very popular. But some of the new things that are coming through now are unemployment training surcharges and upgrade fund surcharges. And then my favorite was in Colorado, the bond surcharge. So be on the lookout for those new types of taxes as they come up and are assigned because the legislation is passed, the employer is responsible. Make sure that you’re working with somebody like PTM to identify those taxes and make sure that you’re not only withholding and assessing the employer portions correctly, but then now that you’ve withheld it, what do I do with it? Who’s the proper recipient for that fund? What are the, the timing deadlines? Are there any thresholds related to balances? When can I file? And what documentation has to be submitted? Along with that, oh, I guess I could jump ahead of myself. Sorry about that. So, you know those scenarios about who to file and how to file, very, very important to stay on top of. Okay. summer, is there anything else that you you wanted to add? I, I think I might’ve gone out of order there and I apologize. I jumped in the front.

POLETTI:

That’s okay. I think what I, what I’d like to do is speed this along a little bit and I think you went through some tips we have reciprocity that we’d like to have you and Kelly discuss. Cause this can get a little interesting when you’ve got neighboring states that have other agreements outside the standard. So why don’t you guys take it away and, and tell us what the heck is reciprocity?

SHINE:

So I I can easily start with that. The, the reciprocal agreement, or the reciprocity agreements between states are known and defined legal agreements between the states when an employee, so an employee who might be working in and living in a different state, is not necessarily subject to that tax at bo at both locations. So that non-resident certificate or that reciprocal certificate that gets filed along with the W four or in addition to a W four, tells the payroll department not to withhold those taxes based on you know oh, what’s the word I’m looking for? A certified you know, fact that I’m, I’m actually a resident of this state. You know, I sign off on the agreement. It’s a legally binding thing saying, yes, I I actually live in Indiana, you don’t have to tax me in, in the state in which I work.

So those official reciprocal agreements are part and parcel of most payroll systems, right? And then you’ve got that W four data that can come in and impact withholding very helpful. Where the challenges come in are for those states that don’t necessarily have a defined legal agreement to exempt or not withhold, but there is treatment required for those taxes. So, you know, sometimes if you work in one state, you still have an obligation to withhold in both states, but you have to subtract that tax from the other. And this is a very, you know, this is, this is all embedded in, in most tax engine, most payroll services to understand those requirements. And it all goes back to that key work address and home address. When the information comes in, the gross net computation will take that into account, or the withholding will apply any data or certificate data that has been provided through the W four process, and then make those appropriate with appropriate withholdings.

So symmetry defines those in five distinct types. We call these credit types where we would credit back all of the taxes against the withholding in the resident state versus none of the taxes versus a blended rate et cetera. So it can get very, very complicated when it comes to those multiple states. And then add to that, what happens if I’m working in Minnesota for, for one week and then I’m working in North Dakota for the, the next week. Now you’ve added yet another component or layer of complexity to that withholding. So it’s very, very important. And again, I’ll underscore this in the age of covid too, that employees employer payroll departments start to take a longer and stronger look at these addresses and where the employees performing that work. So I don’t expect a reciprocal withholding to get any simpler and you know, true to everything. I think once you’ve added in a multiple state work site, and then the fact that the employee is now deployed to home maybe performing that work, it has become very, very complicated and challenging in the last six months.

POLETTI:

You said a mouthful. Everything has become more challenging in the last six months. Thank you for that. All right, why don’t we was

ROGERS:

Was Wisconsin a reciprocal state? Do you know?

SHINE:

So, so this is Greg. I believe that Wisconsin does have a reciprocal agreement with at least one other state. I can look it up while we’re while we’re on the phone here. Okay. I believe that they have Minnesota I use Minnesota North Dakota cause I’m familiar with that one. There is definitely a, a lot of cross stating employment there. But let me pull up Wisconsin while we’re talking here and see what I can find out.

POLETTI:

Okay. Okay. We don’t wanna run out of time, so let’s move along while Greg is doing his pre-search. Yep. Okay. So we’ve talked a lot about folks getting into new states. Sometimes you want to hire and you wanna hire the most talented person and you don’t care where they live. Or sometimes a tenured employee who you love moves out of state and you want to keep them. And so now you’re in another state. So we’ll talk a little bit about what you need to do next. So timing is everything. And, and also you’re, you gotta kind of keep an eye on your payroll system cuz I’ve heard of some payroll systems that will automatically default the state of a a new employee to your business’ home state. So sometimes you have to be careful not to accidentally tax out-of-state employees in your home state.

 I’ve seen that, and it can get a little messy if that employee doesn’t notice until they file their personal tax returns that they’ve got a mismatch with the W2 and the, the state that they live in. So most states require the business owner or some sort of C level officer to apply for the business id. Some service providers will offer assistance but, you know, sometimes there’s personal information that you don’t really feel like giving out. So it’s always a best practice for a high level person at the business to go to the State’s website. Usually the best practice is just to go to you Google Texas Unemployment Insurance or California withholding you. You know, you can Google using some generic terminology and usually you can find the website. They will vary in the names of their agencies.

Also, you know, sometimes it’s the Department of Revenue, sometimes it’s the workforce development, you know, it’s, it’s all over the place. So just get on Google and you can find the website. You’re probably gonna have to find two if you’re in a state that does withholding in Sui. Usually they’re not the same website. But Google, you get to the website, you go to the business section and you can find information. Most websites will allow you to apply online, with the exception of the couple that want you to file a return first so that they see that you have enough wages. So you, you, you gotta do your research here and you know, you need Go ahead

SHINE:

<Laugh>. I, I’m sorry, I was gonna grab that, that little segue to let you know. Wisconsin, the question was does Wisconsin have any reciprocal agreements? The answer is yes. Illinois, Indiana, Kentucky, and Minnesota residents working in Wisconsin have to provide that written statement. So again, it’s a W four looking form. It’s called the W two 20. And an employee submitting that form W two 20 to their employer will in fact exempt themselves from those employer taxes. And the employer then should withhold only for the resident tax where the 10 40 obligation will be. And I will go ahead and let you guys know. That’s from the APAs guide. Symmetry makes me go through about three layers to get to that information in a testing scenario. I cheated. I used the APA a great resource for all your payroll professionals.

POLETTI:

Of course. Yes. and they didn’t pay us to say that. So really do your research and, and do it quickly as soon as you hire the employee or when you’re thinking about hiring them or when, when the current employee tells you that they’re thinking of moving outta state. Probably good to to hop on that research. Go ahead and next slide. Yeah, again, don’t wait until the last minute. So you gotta create a strategy, you know, and, and organize yourself. Okay, so we, we can talk a little bit about scheduling and remitting taxes and tax returns. And I think that this one is a good one for Kelly.

GONZALEZ:

Well, you, you that once you set up the employees and once you’re withholding taxes, that remitting the taxes and paying the taxes is the easy part, but it’s probably just as complicated as all of all of the rest of the pieces to even get you here. One thing that you really need to do and will stress as much as possible as to avoid penalties, it’s really crucial that you get all your information and that you get everything set up correctly and that you have, you know, your, your work, your payroll teams, your, your tax teams or whoever, understand what needs to happen with the state that you have set up so that you can avoid penalties that you’re in compliance and that you don’t create more issues for the company and the employee themselves when they go to do their tax filing.

Accuracy is of, but most important, wanna make sure you have social security numbers correct. You wanna make sure that you have you’re in compliance with the state retirement plan data, your employees names that you’re reporting the wages and taxes associated with that new state correctly. You also wanna be able to send out packages to your clients so that you know, if they’re using a service bureau or a payroll company that you’re sending information back to that client so they can review it and approve it before you go to file this tax. Like it was previously spoken about amendments any type of failure to file any type of corrections that needed to, to be happening on things. Cause we didn’t do our due diligence of the employee information or our rate information or our tax information creates more work and more confusion.

And if you’re working with the state for the first time, you wanna make a pretty good first impression. You don’t wanna file bad data and then have to go back and correct it. Cause that’s, you know, it seems like you’re gonna be continually trying to catch up with yourself. One of the, the funny things with tax filing is that every jurisdiction is doesn’t really follow federal. Sometimes they march to their own drums. Some want you to file electronically. Some of them want you to file on paper, some want you to file on a pre-printed form that they send to you. Some have a coupon that they want you to fill out and send the payment back. Some of them even have the payment marked as the return and you don’t file anything. So there are so many different requirements, so many things that you need to figure out.

 So once you review your rates, get all your information correct, figure out when you’re supposed to file and how you’re supposed to file, then you need to make sure that you’re filing by the deadlines. Because a lot of agencies have different deadlines. You have early filers, you have agencies that consider your return late if it’s not in house. So it’s not by the postmark. So there’s so many different elements that you have to look at when you’re filing that. You really more than likely need it, need somebody to help you with it. There’s a lot of information. And then once you get it all figured out, they’ll change it on you. They’ll change the requirements, they’ll change your filing frequency because you hit a threshold. Sometimes you’re a monthly filer, and then if you’ve reached a certain dollar amount of filing, they’ll bump you up to being semi-weekly or a quad filer.

So there’s so many different things that you need to look at. That’s not as easy as just remitting payments and sending a paper return that balance to that dollar amount. One of the, also some of the things that are coming into play beyond state withholding, beyond suey and your locals, this new element of family leave that’s coming into play. And those are also different requirements. A lot of different things that are coming into work and, and new FMLA that are coming out by states as they approve them. Some of the tips that we can send out a lot of things is, you know, you’re not in compliant if you’re submitting filings at the wrong frequency. Some of them won’t even post them, some of them won’t reconcile it. And there’s a whole list on this, which you’ll get the deck after the the this presentation.

So I’m not gonna go into all of these, but really, if you make mistakes in your filings at your quarter end, it’s gonna affect your year end. So if your quarter ends don’t balance up and you’re still correcting those by the time they to year end, your annual recs won’t balance. So you’ll have another issue that’s compliant and your W2 s aren’t going to balance. So you really need to start working on all of this now so that by the time that you get to year end your balance, you’re clean and your filings are good.

POLETTI:

Awesome. And when I hear year end not balancing, I hear potential for notices or amended returns. So good segue. So notices from other states, I mean, I, I remember hearing from a client once, you know that, hey, in my home state, I can power through a notice in about 20 minutes, but when I get a notice from an outlying state, it takes me all day and it’s really frustrating. So the, the agency communication can be really complicated and difficult to understand. They use different terminologies, they use different names for their agencies. And then, you know, here’s a horror story. I once called on a penalty for a PA local and I got a four year old who said, my mommy’s not here right now. You know, this is pre act 32, but you know, they were doing it in someone’s basement basically.

So good time. So anyway, you know what you need to do is you need to respond. Failing to respond can just make it difficult, you know, so don’t shove it underneath a stack of papers and think you’re gonna deal with it later. You know, one thing that Act 32 did was was centralize it to some degree. Ohio’s another story. So that’s fun. But they do have some portals for you to log on. You know, not all agencies issue paper notices, so sometimes you’re required to log onto those portals and just kind of proactively check. So here’s a, a few things to look for. Maybe a payment not applied correctly and incorrect. D i n used you’re not registered to pay employment taxes or, or the return wasn’t posted. And those common problems can display very differently in a notice. You know, sometimes they’ll tell you you’re not registered to pay taxes in this agency, and sometimes they’ll just refund you what you paid and you think, awesome, I got a check. So you have to do a lot of research carefully before you take, such as cashing a check or cutting a check.

Go ahead. Next slide. So who’s reviewing the highlights? It’s me. Let’s see. I’ll do this <laugh>. So you wanna track where your employees live and work, track those reciprocal agreements. Set up a payment schedule either in your system, your payroll system, your tax system. Have a nice spreadsheet so that you know and, and understand when you have a Nexus event. You know, when you’re hiring in a new state or when you have an employee moving, you might even have a remote employee who moves from one remote state to another remote state. So you gotta pay attention to that as well. And then maintain some sort of library of information. We tease apa if you’re not currently a member, it’s a good idea to do so. They have a ton of information and it really, it, it packs a punch, it’s well worth its cost.

ROGERS:

Ok,

POLETTI:

Next slide. And ask for help. That’s the, the rallying cry of 2020 is with the covid and the regulations and, you know, everything this year, it, it’s, it’s, it’s a lot for everybody to handle, so don’t be afraid to ask for help if you need it.

ROGERS:

So our next webinar coming up at the end of October is going to be on the updates to the 9 41. But we’re also gonna have, we’re also gonna do talk about amended returns best practices. So I think that’s gonna be a really big webinar as well. I think we’re ready for some q and a. Is that where we’re at here?

POLETTI:

Yeah, well we’re talking a little bit about trends in the landscape. So we’ve got a newly released 9 41 x. We’re gonna do a webinar on that. We’re also going to talk about some changes that are upcoming in 2021. But really the reason why we put on this webinar today is because we’re seeing trends. You know it sounds cliche again, but when work from home became work from anywhere, because large companies like Twitter and Google started saying that they were going to allow employees the choice ongoing, whether they wanted to return to the office after covid or not. We’re seeing people moving, you know, they’re taking the advantage of cheaper living elsewhere or moving back home or things like that. So it seems as though large cities like Los Angeles and LA and New York are seeing people leave to go to quieter places with less traffic. And so it seems like this multi-state, multi local isn’t just a current condition and it’s likely to increase in complexity. A as you know, we return to whatever we think is normal. I think this is the new normal is that people are gonna just live wherever and, and, you know, remote work is here to stay,

GONZALEZ:

So. Right.

POLETTI:

Okay. I think we’re ready for Q and A now.

ROGERS:

Yeah, we have quite a few questions and I wanna make sure that we can get to them. It was a lot of information and we may need to do something more on, on the topic. But let me get with the first question we have here. Do you have to set up a state, we might have gone over some of this stuff. Do you have to set up a state withholding account for employees who work live in a state where the ER does not have a physical location? Wanna take that?

GONZALEZ:

I mean, I’ll take that. Basically if you’re following the, the Fed and the SSA requirements or suggestions, I’m not gonna say requirements. Then yes if you have an employee who is not does not have a reciprocal agreement you’ll need to set up the state for your remote worker. As long as soon as you create that nexus, you’re gonna need to set up that state so that you can withhold taxes and remit it to the agency.

ROGERS:

And I, and I know PTN has a program to, to do that. So if that’s something you need help with, we, we definitely do that for, for clients. Thank you Kelly. And then this next question is

SHINE:

I’m sorry, this is Greg. I was talking on mute before you. I think it’s a, it’s a great question and, and it’s important that you start to ask that question. I think for a long time you might not have had to do it. Now it’s gonna start to get heightened attention. So you know, and I think it’s also, I, I don’t know the direct answer, but I think it’s gonna vary by state. We’ve seen some guidance where states are saying, give it till the end of 2021, we’re gonna give you a little bit of wiggle or 2020, we’ll give you some wiggle wiggle room, but get ready because as this becomes the new normal, those states are certainly gonna want their share of it. So thank you very much. And I’m sorry that I was late on the responses too.

ROGERS:

My next question here, how do you determine, we again, might have gone over this, how do you determine when you have to withhold both states? For example, resident state of Arizona, but lived and worked in Oregon for about 175 days? Should 100% both Arizona and Oregon have been collected, Kelly?

GONZALEZ:

Well, I mean, just like Greg said it depends, depends on the state. You have to look at the requirements and depending on residents, you have to do the tests that are out there to determine who, where the withholding is, who does the withholding, and whether you need to a due withholding on the employee based off of business and residency

SHINE:

And, and, and your, and your vendors. A lot of vendors will be helpful in this case too. You know, if I were faced that question and I were sitting as a, as a payroll manager for an employer, I would immediately start running ad hoc calculations against my service to find out what the core provision of service is gonna do based on that work address and live address. Then do the pre-search and do some analysis and maybe you wanna open a ticket with your, with your service provider to make sure that that gross 10 net is performing as, as, as you would, would expect. And of course, to be in compliance. But that would be the first two steps. I would run 15 different computations just to see how it looks, get a comfort for what’s being withheld, if there’s any, you know check it against my, my withholding, if it’s my withholding calculation manually. If I’m seeing a difference, obviously there’s something happening. Then do the research on the website. There’s probably something out there that that addresses it. And then finally open those support tickets with your provider to find out exactly what the system is doing

ROGERS:

Right there. What if the client decides they don’t wanna file for another state? They have had their employees sign the sheet saying they know that they as employees are responsible to pay their own state tax?

GONZALEZ:

No unfortunately, I, I wish, but you, you have employer responsibilities that you need to look into. It’s not just a determination based off the employee. So that would not be I would not suggest that they, they go that route.

POLETTI:

Yeah. And maybe contact an HR professional. That sounds, that sounds like wishful thinking to me.

ROGERS:

<Laugh> got it.

SHINE:

Risk tolerance, right?

POLETTI:

Yeah,

ROGERS:

Exactly. As a PTM client, do I have access to a tax resource? A person I did answer that question to, to John. I I gave him my information. Arizona’s two months behind on registering unemployment. Right now, just as an fyi, another company is that we are a small company with only 12 employees. We just added a new employee in another state. What should we expect our payroll company to do with regard to setting this up?

POLETTI:

Well, I’m gonna go super generic here. But probably the payroll company is going to require you to register for employer ID number or employer ID numbers in that state. If that state has withholding and unemployment taxes and most do usually the payroll company is not going to apply for that for you. They’ll probably require that you do. So they may be able to give you some advice going through the form or to tell you the website to, to go to in order to register. So you’re gonna have to register and then provide them with your employer ID number and your deposit frequency and, and your sui rate in those, in that new state. There are some defaults but whatever information you get from the state, after you apply for your ID number, you’re gonna need to provide that to your payroll company and then they can take it from there.

ROGERS:

Helpful. another question here. How long does an employee have working in another state to trigger the tax requirements? I e, weeks, months, et cetera? Days, weeks, months? I think it’s always days.

SHINE:

It varies by state. I can take that one too. Yeah. Have local jurisdictions in Ohio where it’s day one, hour one worked. Okay. They don’t give you a de minimus requirement. And then of course, I think New York has the most famous example. I believe it’s 14 days in the calendar year. So upon that 15th day of work, they expect not only withholding but reporting of those wages earned. So if you can keep those employees out for 13 days or under the 14 day threshold, you might be able to avoid that. But I would be very, very careful because that stuff, especially in New York, may be changing in the last several months. Okay. But short answer, it varies by state, by jurisdiction. Yep.

ROGERS:

Yeah. And somebody asked what is, what is aba? That was towards the end of the conversation. I think you, you referenced that summer.

POLETTI:

Apa American payroll.

ROGERS:

Oh, apa. Oh, oh, the apa. Okay. Yeah.

POLETTI:

I’m

ROGERS:

Assuming it might have been. Yeah, that’s probably what it is. This next question, we’re currently only in six states of being asked to set up withholding every state so we can hire folks anywhere to work from home. Yikes. A bit overwhelming. And, and again, we do, PTM does have a program that we will do that for you. Is that correct, Kelly? And, and Center?

POLETTI:

We’ll help with the registration. Yeah. Yes and no. Gosh, if you’re only in six states and you’re being asked to register in all 50, first of all, you’re gonna have to file zero returns in all of the states in which you don’t currently have wages. And second, the states might not allow you to proactively a, a business number established just in case you might need to use it later. So you need to do a little bit more research on that strategy to see if it’s if it’s possible.

SHINE:

That’s the first I’ve heard of a Nexus blanket that would cover everything. That’s, that’s a lot. I mean, what a what a what a huge project mm-hmm. <Affirmative>. So usually you know, employers would, you know, you might have the the authority now to go into every state, but certainly wait until you encounter that, that first hire in the state and then make that a, a fast track and work somewhere closely with somebody to get that, that fast track and set up. But to proactively go out and just apply to 50 and then only at the end of three filing quarters, find that 20 of them, you had no wages in the state’s gonna shut you down. They’re, they’re gonna start assessing zero, zero penalties for non-compliance. All kinds of things can happen. You want to keep that very, very minimized and controlled that nexus footprint.

ROGERS:

Got it. Well, we’re at the the end of our time. There’s one more question. I’m gonna try to slide it in. We just hired a remote worker and Mo we are at t, so that’s Missouri. We are a Texas company. All revenue generated will be for Texas customers. Our payroll company says they will file the employment tax reports, but I’m more worried about other taxing authorities. Will my lawyer be able to help me understand these, or those are my CPA <laugh>?

SHINE:

So I, I would say, I would say the cpa depending on where you are in Missouri, I think, so there are some local taxes that implore around some of the larger cities there. They’re strictly zip code based taxes. And if that employee happens to fall into one of those zip codes, chances are Missouri’s gonna say, Hey, if you’re working and living here, we want that 1% surtax or city tax. So start with your cpa. Another great place again, and I I will, I, I hate to keep plugging it, but the American Payroll Association, that list serve, that was managed, that was mentioned, great places to throw questions, and you get 50 payroll professionals in the industry watching and monitoring those. And it’s an open conversation and you’ll get 50 great answers.

ROGERS:

Perfect. Well, we wanna thank everyone for your attendance. We went a minute over. Please take the post webinar survey and we look forward to seeing you at our next survey regarding amended returns. And thank you, our panel.

SHINE:

Thank you very, very much.

POLETTI:

Thank you.