This week’s question comes from Bonnie, a business owner. We tested our multi-state employees for unemployment purposes based on Localization of Services, Base of Operations, and Place of Direction or Control. For some employees we were able to determine the appropriate state, but for some we weren’t. Now we need to test based on Place of Residence. What is Place of Residence? Answer: The general rule for employees who work in more than one state is that employees should be covered by only one state to prevent employers from paying tax in two or more states for the same employee. To determine which state, employers should look at four factors, in the following order:
- Localization of Services
- Base of Operations
- Place of Direction or Control
- Place of Residence
The employee is covered by the state under which that employee first qualifies using these factors. For example, if an employee is determined to be covered by a state under the Localization of Services test, the results of the remaining tests are irrelevant. Only if a determination cannot be made under the Localization of Services test does the employer consider the Base of Operations.
For the Place of Residence test, determine if the employee performs any service in the state in which the employee resides. If the employee performs some services in the state where the employee resides, that state is the state where the employee will be covered.
Contact Vision Payroll if you have further questions.
This week’s question comes from Kenneth, an HR Director. We tested our multi-state employees for unemployment purposes based on Localization of Services and Base of Operations. For some employees we were able to determine the appropriate state, but for some we weren’t. Now we need to test based on Place of Direction or Control. What is Place of Direction or Control? Answer: The general rule for employees who work in more than one state is that employees should be covered by only one state to prevent employers from paying tax in two or more states for the same employee. To determine which state, employers should look at four factors, in the following order:
- Localization of Services
- Base of Operations
- Place of Direction or Control
- Place of Residence
The employee is covered by the state under which that employee first qualifies using these factors. For example, if an employee is determined to be covered by a state under the Localization of Services test, the results of the remaining tests are irrelevant. Only if a determination cannot be made under the Localization of Services test does the employer consider the Base of Operations.
For the Place of Direction or Control test, determine if the employee performs any service in the state from which the services are directed and controlled. Services are directed or controlled in the place where basic authority resides and where general and immediate control originates. If the employee performs some services in the state that is the Place of Direction or Control for that employee, that state is the state where the employee will be covered. If not, go to the Place of Residence test.
Contact Vision Payroll if you have further questions.
This week’s question comes from Angela, an office manager. We tested our multi-state employees for unemployment purposes based on Localization of Services. For some employees we were able to determine the appropriate state, but for some we weren’t. Now we need to test based on Base of Operations. What is Base of Operations? Answer: The general rule for employees who work in more than one state is that employees should be covered by only one state to prevent employers from paying tax in two or more states for the same employee. To determine which state, employers should look at four factors, in the following order:
- Localization of Services
- Base of Operations
- Place of Direction or Control
- Place of Residence
The employee is covered by the state under which that employee first qualifies using these factors. For example, if an employee is determined to be covered by a state under the Localization of Services test, the results of the remaining tests are irrelevant. Only if a determination cannot be made under the Localization of Services test does the employer consider the Base of Operations.
For the Base of Operations test, determine if the employee performs some services in the state that is the base of operations for that employee. The base of operations is where the employee starts work, goes to receive instructions from the employer, replenishes supplies, maintains records, etc. Not all employees necessarily have a base of operations. If the employee performs some services in the state that is the base of operations for that employee, that state is the state where the employee will be covered. If not, go to the Place of Direction or Control test.
Contact Vision Payroll if you have further questions.
This week’s question comes from Matthew, a business owner. I read that we need to cover employees for unemployment purposes based on “Localization of Services”. What is Localization of Services? Answer: The general rule for employees who work in more than one state is that employees should be covered by only one state to prevent employers from paying tax in two or more states for the same employee. To determine which state, employers should look at four factors, in the following order:
- Localization of Services
- Base of Operations
- Place of Direction or Control
- Place of Residence
The employee is covered by the state under which that employee first qualifies using these factors. For example, if an employee is determined to be covered by a state under the Localization of Services test, the results of the remaining tests are irrelevant. Only if a determination cannot be made under the Localization of Services test does the employer consider the Base of Operations.
For the Localization of Services test, first determine if the employee performs all services entirely in one state. If yes, that state is the state where the employee will be covered. If not, determine if the services performed out of any state where the employee works are incidental (e.g., temporary or transitory) to the services performed in that state. If yes, that state is the state where the employee will be covered. If not, go to the Base of Operations test.
Contact Vision Payroll if you have further questions.
This week’s question comes from Julia, a business-owner. We have employees who work in more than one state. I understand how to determine which state’s income tax to withhold, but I don’t know what to do about unemployment tax. Where do I pay unemployment tax for employees who work in more than one state? Answer: The general rule for employees who work in more than one state is that employees should be covered by only one state to prevent employers from paying tax in two or more states for the same employee. To determine which state, employers should look at four factors, in the following order:
- Localization of Services
- Base of Operations
- Place of Direction or Control
- Place of Residence
The employee is covered by the state under which that employee first qualifies using these factors. For example, if an employee is determined to be covered by a state under the Localization of Services test, the results of the remaining tests are irrelevant. Only if a determination cannot be made under the Localization of Services test does the employer consider the Base of Operations test.
Contact Vision Payroll if you have further questions.
Vision Payroll