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The Hidden Cost of Letting Workers Telecommute

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Re: The Hidden Cost of Letting Workers Telecommute

#51

Post by ianferrel »

voidpointer wrote: post #34
cosgroveb wrote: post #13

Earlier quoted context omitted.

Well, Texas has tried recently to say that simply having a server in their state creates a nexus for sales tax purposes...

I have no idea how the US tax system works. But how about this thought: from saying you are taxable if running servers in some state, it wouldn't be a big leap saying "your javascript code runs in browsers on computers that are in our state and you are therefore taxable"...

A pretty big one.

A server is, arguably, a physical location serving products. Javascript running in a browser is the product served. Going with a tried-and-true car analogy, a state can't tax a car manufacturer because the cars drive on their roads, but they can tax them if they produce or sell cars in that state.

Re: The Hidden Cost of Letting Workers Telecommute

#52

Post by billswift »

corruptmemory wrote: post #12
kill-9 wrote: post #8

Yet another way in which government is trying to thwart efficiencies developed by capitalist activity.

I would say that it's another way for the government to capitalize on capitalist activity.

To "parasitize" not capitalize.

Re: The Hidden Cost of Letting Workers Telecommute

#53

Post by nandemo »

sp_ wrote: post #35
nandemo wrote: post #30

Earlier quoted context omitted.

IANAL, but say you're a manager of BigSouthAmericanCorp (maybe Euro/Asian, etc, your mileage may vary) going to a meeting with BigAmericanCorp. Then you can use the Business visa, which is the same as Tourism visa. As long as you're not working for an American employee, it's OK to be in US on work temporarily. So if I were going to US to work on my own business temporarily, I'd either go as a tourist or say, "Oh, I'm…

First, you are confusing visas. The tourist visa is not the same as the visa waiver. There is a tourist visa, it's called B-2 and it does not allow you to do any business or work. Visiting with the visa waiver program means visiting without a visa. Next, for short trips, visiting without a visa is equivalent to having a business visa (B-1). It allows you to meet with US clients, customers, partners, and so on and it…

I'm not confusing the visas, though I probably could have made it clearer. I'm not talking about what you can do with the visa waiver. I specifically mentioned the case where the visitor is from South America, because there's no visa waiver for us.

For people who are require to have visas, the tourist visa and the business visa are issued together. When you get to the port of embark, you tell the immigration officer whether you're coming for business or pleasure.

http://www.workpermit.com/us/employer_b1_b2.htm

> Next, for short trips, visiting without a visa is equivalent to having a business visa (B-1). It allows you to meet with US clients, customers, partners, and so on and it allows you to go to conferences.

Yeah, that's the situation I described.

> It does not allow you to work.

...for an US entity. If you're going for business then you're working, right? Anyway, even if it's not specifically allowed, there's a gray area.

> See as a recent example from Hacker News: http://www.noop.nl/2011/06/american-learning-experience.html

I read that, I think he was quite naive and uninformed. He should have done what I described. "I'm working for DutchCorp, and will go to a business trade event, here's the invitation". Then he would make sure the event organizers would not pay him directly. They would pay his Dutch company, and he would get paid in Netherlands, not in US.

Re: The Hidden Cost of Letting Workers Telecommute

#54

Post by chopsueyar »

mikeryan wrote: post #36
scottw wrote: post #33

Discovery (DISCA) faced this issue in 2008 and decided to lay off all employees who lived in a state with this tax nexus law (I was one of them). There were a total of three employees in my state, but there were probably scores of employees around the country. They probably saved several million dollars annually in sales tax by doing this (back of the envelope calculations). A handful of the employees affected in my…

Note that as a company you can't just re-hire as W2 contractors. Generally (as the article states) you need to have the employees form some sort of corporate entity or work for a corporate entity. Both employment and tax law will treat solo W2 contractors (or even single member LLCs) as full time employees if you're working full-time for a single entity. A lot of times companies will hide these types of contractors b…

Where did he say he anyone was rehired as a W-2 contractor? 1099 could be possible (except for the whole work-for-hire IP issue).

Re: The Hidden Cost of Letting Workers Telecommute

#55

Post by warren_s »

cosgroveb wrote: post #13
pavel_lishin wrote: post #9

Earlier quoted context omitted.

What about happening to answer the phone while on vacation? Or perhaps working on a server that's located in another state?

Well, Texas has tried recently to say that simply having a server in their state creates a nexus for sales tax purposes...

I can't imagine Rackspace would be happy with the impact that would have on their clients...

Re: The Hidden Cost of Letting Workers Telecommute

#56

Post by mikeryan »

chopsueyar wrote: post #54
mikeryan wrote: post #36

Earlier quoted context omitted.

Note that as a company you can't just re-hire as W2 contractors. Generally (as the article states) you need to have the employees form some sort of corporate entity or work for a corporate entity. Both employment and tax law will treat solo W2 contractors (or even single member LLCs) as full time employees if you're working full-time for a single entity. A lot of times companies will hide these types of contractors b…

Where did he say he anyone was rehired as a W-2 contractor? 1099 could be possible (except for the whole work-for-hire IP issue).

For the IRS or Employment law whether or not you are a fulltime employee has nothing to do with how your taxes are filed or paid. My point for those on this board who hire remote employees is that simply re-hiring as a "contractor" does not change them into "not a full time employee"

Re: The Hidden Cost of Letting Workers Telecommute

#57

Post by wladimir »

ianferrel wrote: post #51
voidpointer wrote: post #34

Earlier quoted context omitted.

I have no idea how the US tax system works. But how about this thought: from saying you are taxable if running servers in some state, it wouldn't be a big leap saying "your javascript code runs in browsers on computers that are in our state and you are therefore taxable"...

A pretty big one. A server is, arguably, a physical location serving products. Javascript running in a browser is the product served. Going with a tried-and-true car analogy, a state can't tax a car manufacturer because the cars drive on their roads, but they can tax them if they produce or sell cars in that state.

It is not always that easy to distinguish servers and clients.

What about P2P systems such as Skype?

Re: The Hidden Cost of Letting Workers Telecommute

#58

Post by hopeless »

I work at a large multinational software company where distributed teams have been encouraged across all projects. I live in Ireland and work in/for a U.S. team. Many of the U.S. team also work from home.

Recently the edict came down that working-from-home for those employees with an office was not acceptable. It listed a large number of negative consequences (loss of career prospects, management visibility, team cohesion, and social interaction). Each and every one of these applies to me as part of the distributed team (which is still being implemented) but apparently the double-standards are ok.

Working from home is a no-no but working from another country is just fine!

Re: The Hidden Cost of Letting Workers Telecommute

#59

Post by chopsueyar »

mikeryan wrote: post #56
chopsueyar wrote: post #54

Earlier quoted context omitted.

Where did he say he anyone was rehired as a W-2 contractor? 1099 could be possible (except for the whole work-for-hire IP issue).

For the IRS or Employment law whether or not you are a fulltime employee has nothing to do with how your taxes are filed or paid. My point for those on this board who hire remote employees is that simply re-hiring as a "contractor" does not change them into "not a full time employee"

Well, then the case could be made that they were incorrectly being treated as employees and should have in fact been contractors.

The IRS looks at the common law rules between the two entities, based on three categories:

Behavioral: http://www.irs.gov/businesses/small/article/0,,id=179111,00....

Financial: http://www.irs.gov/businesses/small/article/0,,id=179113,00....

Type of Relationship: http://www.irs.gov/businesses/small/article/0,,id=179116,00....

There is even an IRS form, SS-8, which you can submit to the IRS to 'clarify' how the relationship should be treated...

http://www.irs.gov/pub/irs-pdf/fss8.pdf

All of this information is available here:

http://www.irs.gov/businesses/small/article/0,,id=99921,00.h...

Re: The Hidden Cost of Letting Workers Telecommute

#60

Post by enjo »

rada wrote: post #42
enjo wrote: post #39

Earlier quoted context omitted.

A handful of the employees affected in my group were re-hired as contractors. Those states are going to have a field-day in the event of an audit. We had a ton of trouble recently with a contractor (who worked on his own time, with his own equipment, for a specific duration on a project)... I can only imagine what states will see when they find out they brought back former employees. It's going to be very difficult t…

Can you clarify what state and what kind of trouble you had with the contractor? Were they contracting through a corp/LLC?

This is a bit late, but oh well.

It was a single contractor, working on a project tangential to our primary codebase (an add-on product). He had several other clients and projects at the time and was paid by the hour for the work.

Part of the issue was that he was operating as sole proprietor, which meant he had no legal entity for his work. The state wanted to see that he was operating as a business and the lack of any legal entity surrounding his business made that a bit difficult.

We managed to get it sorted.. took more of our time than I'd like tho.

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