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.