does a home office establish tax nexus in Illinois

[NETRANGERCDA]

Does an employee working from a home office in Illinois establish tax nexus for a company based in Wisconsin? I am asking because I had a job offer revoked because of this issue. It would have been a sales position where I worked from home in Chicago 25% of the time.

 

[cbg]

Yes. It can.

And even if it didn't, unless you have valid and supportable evidence that the job offer was pulled for a reason specifically prohibited by law (race, religion, national origin etc.) it doesn't matter. The employer can LEGALLY pull the offer and does not owe you either a reason or a job.

 

[justalayman]

Does an employee working from a home office in Illinois establish tax nexus for a company based in Wisconsin? I am asking because I had a job offer revoked because of this issue. It would have been a sales position where I worked from home in Chicago 25% of the time.

The Wisconsin employer cannot withhold Wisconsin state tax and they do not have to withhold Illinois state taxes so no, it does not create any burden upon the Wisconsin employer if they choose not to withhold Illinois taxes.

It is legal to not give you the job but their reasoning is bull****.

 

[NETRANGERCDA]

The Wisconsin employer cannot withhold Wisconsin state tax and they do not have to withhold Illinois state taxes so no, it does not create any burden upon the Wisconsin employer if they choose not to withhold Illinois taxes.

It is legal to not give you the job but their reasoning is bull****.

My question is not about withholding state income tax, it's about whether or not my employer in Wisconsin would be subject to Illinois income or sales tax on sales in Illinois.

 

[cbg]

It's not just state taxes though. It's unemployment and workers compensation and possibly their health insurance and probably a few other things I'm not remembering at the moment.

I've BTDT. It's a royal pain in the ass.

 

[ecmst12]

Duplicate post.

 

[justalayman]

My question is not about withholding state income tax, it's about whether or not my employer in Wisconsin would be subject to Illinois income or sales tax on sales in Illinois.

so, they don't want you to sell anything in Illinois because they are worried it would subject them to Illinois tax? Are there other states they don't want you to sell products in so as to prevent incurring taxes in those states?

cbg
It's not just state taxes though. It's unemployment and workers compensation and possibly their health insurance and probably a few other things I'm not remembering at the moment.

Health insurance can be purchased, or not purchased, wherever the employer chooses. WC is based on Wisconsin in this situation because that is where the OP would be employed. The business does not maintain a business presence in Illinois so they do not purchase Illinois anything.



The employer can pay unemployment to whatever state they choose but will likely pay it to Wisconsin. Since the OP would be employed in Wisconsin, he could file in Wisconsin or his home state with an interstate claim. The money would be transferred to the Illinois coffers once he files in Illinois.



I am in a similar situation with a couple of neighboring states. In fact, a couple that happen to have reciprocal agreements with both of the OP's states regarding taxation but some of this is irrelevant to the OP's situation because of the lack of a business presence in a state outside of Wisconsin.

The employee would be employed in Wisconsin regardless of him having a home office.


and I LTDT (live there doing that). I live < 1 mile from a state border. My union hall (who purchases our med insurance) is in the other state but they have purchased insurance both in my state and their state. There is no requirement you purchase it in any particular state, especially since there is no requirement you purchase any at all. (with the possible exception of the ACA deal. that one I'll admit I am ignorant on)

WC is based on employers location, even if we travel to the neighboring state. Hell, I have friends that have traveled to 20+states. Do you think the local employer (here) they are working for has to purchase medical and WC insurance in every state they work in?

Unemployment; an employer can choose to pay to the employees home state or the employers state. Most pay to the employers state.

 

[cbg]

It's got nothing to do with sales tax. It's got to do with state withholding tax.

And yes, I agree that the employer CAN choose to do a lot of things. They can also, quite legally, choose not to have to make those choices and simply not hire someone from out of state. Geographic discrimination is quite legal in all 50 states.

Ever been to MA, JAL? I don't live a mile from the state line, no. But this is a small state. In my office, we have employees who live in RI and in NH. I'm not talking about just the university itself - I mean people who sit in the same office suite I do. Quite accustomed to this.

My sister, now, she's the one who lives in WI and works in IL.

 

[justalayman]

cbg;3220136]It's got nothing to do with sales tax. It's got to do with state withholding tax.

actually, this thread is apparently about sales tax and such. I mistakenly read it as replication of the other thread and went the income tax route.

My question is not about withholding state income tax, it's about whether or not my employer in Wisconsin would be subject to Illinois income or sales tax on sales in Illinois.

And yes, I agree that the employer CAN choose to do a lot of things. They can also, quite legally, choose not to have to make those choices and simply not hire someone from out of state. Geographic discrimination is quite legal in all 50 states.

I agree and I said that in the other thread.

Ever been to MA, JAL?

Nope but we are talking about my neck of the woods in this one.

If I recall correctly there were a lot of people that used to fly out to MA to apply for UI because they had one of the highest UI benefit rates in the country and until recent law changes, you didn't even have to have worked in MA to collect UI from MA. They changed it so you have to have worked in MA though. There was a recent case where a woman would "hire" you for one day. You had to "purchase" uniforms from her (I think it was somewhere around $400-$600 for the uniforms). You worked for one day. That qualifies you to collect UI from MA. Last I heard she was heading to the steel bar hotel for fraud. I believe the state was attempting to collect from those that collected UI through her services. A friend got a bill for something like $19k from MA due to that.

 

[cbg]

But at least we both agree that whether we agree that it's a legitimate reason or not, it's still not an illegal action by the employer.

 

[justalayman]

But at least we both agree that whether we agree that it's a legitimate reason or not, it's still not an illegal action by the employer.

absolutely. I'm not totally unreasonable.




I find the question about incurring Illinois sales tax liability odd though since the OP stated most of his activities would be not within Wisconsin. Maybe they really really don't like Illinois and that is the only state they do not wish to incur a tax liability issue with so as long as he doesn't sell stuff in Illinois, they are good with that.

 

[FlyingRon]

To get to the question asked as opposed to all the drivel, it boils down to whether you are just an employee working from home there or you are doing any business there. Yes agents and representatives based in Illinois does create nexus there for tax purposes. You don't strictly need to be selling something. If you're sitting in your house plugging away from the computer without talking to anybody in state about the business, you're probably not.

 

[davew128]

The Wisconsin employer cannot withhold Wisconsin state tax and they do not have to withhold Illinois state taxes so no, it does not create any burden upon the Wisconsin employer if they choose not to withhold Illinois taxes.

Yes it does. If the employee is working in a state at the employer's request, that establishes nexus. Once the business has nexus, it is subject to the laws of that state.

 

[davew128]

You don't strictly need to be selling something.

Actually if we're using that example, if sales is ALL the employee does, and I do mean all and absolutely nothing else, that specifically does NOT create income tax nexus as a result of federal law.

 

[justalayman]

Yes it does. If the employee is working in a state at the employer's request, that establishes nexus. Once the business has nexus, it is subject to the laws of that state.

Notice the question about whether illinois is the only state the employer would prefer the employee not do business in? What you are stating can make a difference but it is not as simple as you suggest.

If the employee only takes orders and the merchandise is shipped FOB, the merchants taxes apply. If the seller delivers to the customer in their home state, whether the merchant must charge taxes varies from state to state and what the merchandise actually is and even more importantly whether the sale is a retail sale or wholesale.


Also realize that it appears the op is suggesting a situation where he chose to maintain a home office. That does not establish a connection such that it would impose a tax liability to the employees state.