Distance learning for the nation's college students has increased relentlessly over the past 14 years, with 6.3 million higher education students taking classes online, according to the Distance Education Enrollment Report 2017 conducted by the new Digital Learning Compass Organization.
The growth of online courses has enabled more higher education teachers to work from home, which can allow them to keep their jobs as they raise children or care for an elderly parent. In addition, employers are able to retain talented professors and cut overhead costs.
The resulting change in the workforce, however, has created a new set of challenges for payroll tax administrators as they seek to comply with multistate payroll tax laws.
Multistate Payroll Tax Compliance Headaches
When an employee works in one state and lives in another, employers are required to collect the applicable taxes for that employee, no matter where the employer is located. The problem is that rules vary from state to state and the regulations are constantly changing. This can leave payroll supervisors with a headache as they try to sort through the regulations and avoid tax audits.
Some of the issues creating more work for payroll tax administrators include:
- When an employee lives in one state and works in another, which state has taxing authority? In some cases, taxes may be due to both.
- Payment schedules and tax forms vary from state to state and the rules change depending on the number of employees
- Employers are required to register as a business in the states where remote employees work
- When remote employees quit, the employer has to terminate the business account in that state
As university payroll administrators begin to educate themselves on issues involving multistate tax laws, they can start with the following best practices:
- Track where employees live and work
- Set up a payment schedule for employee taxes
- Maintain a library of information relating to the taxing agencies in states where your employees work. Regularly check with all agencies to be sure nothing has changed
- Reconcile your accounts daily and keep tax accounts separate from operating funds
- Consider outsourcing your multistate payroll tax management if you'd rather have specialists handle all of the above
Payroll Tax Management Can Help
Mutlistate payroll tax challenges can seem overwhelming. But there is help. Third-party payroll tax experts make it their job to keep up with the landscape no matter how big it becomes.
At Payroll Tax Management, we provide payroll tax expertise and compliance with more than 11,000 taxing agencies across the country. Scalable technology and easy-to-use solutions take the hassle out of payroll tax processing.
Put our experts to the test and learn the most effective way to manage your multistate payroll tax issues.