Employees Working Out-of-State Often Fail to Let HR Know

Remote work has created tax compliance risks for employers. Since the COVID-19 pandemic began, 28 percent of employees have worked outside their home state or country but only one-third reported all those days to HR, a 2021 survey shows. Consequently, their employers may have failed to withhold payroll taxes appropriately but didn’t realize it.

Unless HR monitors where employees work—something 94 percent of employees say they would accept—their companies risk hefty tax penalties in the event of an IRS or state/municipal tax audit.

The 2021 Adapt or Lose the War for Talent survey, conducted on behalf of Topia, a talent mobility software company, polled 1,250 employees—half in the U.S. and half in the U.K.—who work for international companies with at least 2,500 employees. The survey, which included 250 HR professionals, was conducted from Dec. 11, 2020, to Jan. 12, 2021.

“HR leaders recognize that remote and distributed work offers a competitive edge for attracting and retaining talent and for building diverse, highly skilled teams,” said Topia’s CEO Shawn Farshchi. “As flexible work becomes a mainstay of business culture and talent strategy, HR and finance leaders must collaborate to make it work from a compliance perspective. The potential advantages are too important to ignore.”