I am not a lawyer so perhaps my hypothesis is wrong.
States are usually based around where you are more than half the year. But that's likely simple to show. If you're actually not there they don't have much of a complaint.
This gets really messy for consulting companies, where employees "work" at the client location 3-4 days a week, 2-3 weeks a month.
We had to track and report what states we worked in and what days, down to the billing hours, and then in some cases had to file tax returns in some of those states.
Also, all of the partners were required to file taxes in every state where the company earned income, which worked out to something like 46 states and 5 countries.
The nexus is "where the work is performed" or "where the employee resides" and usually states have agreements with the neighboring states so it balances out.
https://www.njspotlightnews.org/2022/09/nj-remote-workers-ny...
Also eyeballing CA as they send us one of those mean letters you speak of. That was "fun" to sort out.
Many countries have tax law to deal with this type of American bullshit but it's still something to be aware of.
Just live in 3 different states for ~33% of the year each and you don't have to pay state taxes? Must be easy in NY/NJ/CT. :)
Nope, sorry, completely wrong.
You pay taxes to the states proportionately to how much time you spent in the state for the year. Many states don't even have a "floor" for how much time an employee works in a state before they're required to pay income and payroll taxes to that state, so in some states even one day working in that state triggers tax.
Consulting firms track employees time spent in each state down to the hour so they can properly pay payroll taxes. Many consulting firms will even pay for tax return prep for employees required to work in other states long enough to trigger tax compliance.
Very importantly, the employer is already subject to additional liability by the very fact of the employee working in another state/jurisdiction. It's irrelevant from the perspective of the employer's legal liabilities whether the employee goes through the formality of updating their W-4.
But note that failure to update a W-4 after moving to another state or country is generally considered grounds for for-cause termination.
The country/state an individual is working from has the potential to arrest and deport the individual. Or fine and garnish wages for unpaid taxes.
So the choice isn't Big Brother companies who want to know where you are at all times and respectful companies who allow you to get your work done how you want. It's between companies who are following the applicable tax laws or those who are not. A company that is structurally opting to not follow laws seems untenable. A company is a legal construct in many ways. Whether or not the employee can commit something like tax fraud is perhaps a less interesting question, because, yeah, you can probably cheat on your taxes.
Talk to people who work for a big consulting firm, they've been taking "tax holidays" for the last 70+ years to ensure they don't spend more than 50% of their time away from their home base.
These companies are no fools; they wouldn't eat productivity and billable hours if they felt the state wouldn't care.
That's precisely the point; Many workers are not applying for work visas, which makes them outlaws and subject to deportation. Some countries have digital nomad visas with 0% tax rates now, but not most.
> If I have a po box or perhaps even a street address in WA or TX (no state income tax) but live in an airbnb somewhere in CA, how can the state figure it out?
Hypothetically, CA is financially incentivized to find that out, how is the the question.
But, if they do then they are going to
1) audit
2) if you don't respond to audit and tax -- arrest
3) at the same time suit the employer, especially if they have any operations in CA for not declaring your work properly.
It's a compliance problem for the company, it's not about controlling their employees. From the employee point of view, it may put you on the wrong side of both visa and tax laws wherever you are sitting.