Paid double state taxes as a remote worker, how do I resolve? During the 2014 tax year, I moved from Pennsylvania to North Carolina. I kept the same job working for my employer in Pennsylvania as a remote worker. Despite several requests on my part for my employer to update my tax withholding information for the state of North Carolina, my employer never did so. Come tax time, my tax advisor had me file taxes as a part-year resident, paying taxes to both North Carolina and Pennsylvania, despite my W-2 only showing taxes withheld for Pennsylvania. As a part of the PA tax return, we requested a refund for the time worked remotely, and taxes were paid to North Carolina for this time. Pennsylvania rejected this request for a refund because of what the employer reported with my w2, despite me sending a copy of my mortgage showing my change in residency, and a copy of my North Carolina tax return showing the taxes paid. Pennsylvania wants something from my employer backing up my claims, but I've since left that employer, so they are unwilling to do anything for me. How should I proceed in this matter? Was the advice of my tax preparer incorrect, and I should've never reported income to North Carolina? Can I hold my former employer liable in any way, or make them cough up the information that Pennsylvania wants?
Your tax advisor was legally correct, but perhaps not very savvy. Unfortunately, the best way to resolve this sort of situation is to avoid it: You should have insisted your employer stop withholding for PA as soon as you moved out of state. Once someone else has possession of your money the burden is on you to get it back, and the burden can be (practically) quite high before it runs afoul of any serious laws. The fact is that your filings are correct, and the PA Department of Revenue is being ridiculous. If they can't be satisfied with reasonable and adequate evidence backing your return you can file administrative appeals at little cost in hopes of reaching a more reasonable agent. However, if I were in this situation, since NC's tax rate is higher, I would just amend my NC return to claim a credit for taxes paid (even though erroneously) to another state. (This takes advantage of our federalist system and your state citizenship and puts the burden on NC to collect the "correct" difference from PA if they care enough. You also don't have to fight for the actual return of money with your new state because presumably you will owe them taxes again this year, and if they haven't returned what you claim you're owed then you just deduct it from what you owe this year.)
There are vendors providing software to facilitate this sort of task. Avalara is perhaps the best known, but I don't have any experience with it and couldn't say whether it's actually any good or not. But the bottom line is that in a destination-based sourcing regime, sales taxes must be computed based on the address of the destination, not city or ZIP code associated with that address. As Avalara has noted, this is a giant hassle, but it's nonetheless the current state of the law. Of course, this assumes the seller has sufficient nexus with Louisiana to trigger a duty to collect sales taxes in the first place. From the question, it is not clear whether this is true.
I have extensive domain knowledge of your question. In short, your plan won't work. Here's why... Corporate Taxation and the double taxation problem Corporations are taxed in the U.S. as separate legal entities (unless they meet certain exceptions described below). Therefore, if your corporation does not avoid being taxed as a separate legal entity, your plan will fail due to the “double taxation” problem. I.e, Your corporation will be taxed first at the corporate level. Then after you pay the corporate tax, YOU WILL BE TAXED AGAIN as an individual, when you take the money out of the corporation via income or dividends. Or if you decide to leave the money in the corporation, there is an excess retained earnings penalty. Subchapter-S election and "flow-through" entities The way to avoid the double taxation problem is to make a &quot;Subchapter-S election” for your corporation. This &quot;S-election&quot; will cause the corporation to be treated as a “flow through” entity for taxation purposes — allowing the owners to be taxed at the individual level only. The IRS imposes additional limitations and restrictions on these &quot;S-corporations&quot; and their ownership structures. Limiting things like the number of owners the corporation can have etc. The problem is that even with this subchapter S election, your concept still won’t work. This is because ALL your income will &quot;flow through” all your corporations (via IRS Form K-1) and accrue to you at the individual level. Therefore, nullifying the “compartmentalization of income” effect you were trying to achieve. Conclusion In short, your plan won’t work. There are too many rules in place to effectively close the loophole you imagined might be. Disclaimer: I am not a lawyer or an accountant. This answer is not legal or accounting advice. Please consult the proper professionals for appropriate professional advice.
In general, in the US, Bob may do this. If the second company is a competitor of the first and Bob has access to confidential information from his first employer, then there could be an issue. Some employers require their employees, or some of them, to agree to &quot;exclusive employment&quot;, that is to agree not to accept any other employment while employed by the company. If Bob has agreed to such a contract, he would be in breach of it if he took a second job and could be fired if his main employer learns of this. This is not a problem if Bob gets permission for the vacation work from his usual employer. In any case, Bob is not committing a crime, even if he is violating his contract.
Raise the question with your employer If you believe that you are an employee and not a contractor then there is presumably something you want from your employer. This may be additional wages and entitlements that you would have or will become entitled to for past or future work respectively. Or you may have been injured and want workers' compensation. Or terminated and you want redundancy pay. Whatever it is, work it out and raise the issue with your employer. You might want to consult an accountant or union to help you. They may acknowledge that you were incorrectly classified and give you what you want. Winner, winner, chicken dinner! Or they may dispute it. If so, you need to follow the dispute resolution processes at your workplace. These typically involve informal discussions, escalating to mediation and then to a workplace tribunal run by the government. You will almost certainly want to consult a lawyer or union to help you - given that you don't know where to start the learning curve is likely to be too steep. In virtually every jurisdiction if people are employees at law they can't choose not to be. in british-columbia the relevant law appears to be the Employment Standards Act although it's not unheard of in edge cases for a person to be an employee under one law (e.g. workers' compensation) and a contractor under another (e.g. income tax). From the linked site: The overriding question is “whose business is it?” Is the person who is doing the work doing it as a person in business for themselves? If you are working "for" your own business you are probably a contractor. If you are working "for" your employer's business you are probably an employee. For example, if you are an accountant with several dozen clients, maintain your own business premises and charge for your advice based on the amount quoted rather than by the hour, you're a contractor. If instead, you have 2 clients, work from their premises at set hours and get paid by the day or week, you're an employee with 2 jobs. In edge cases these are not cut and dried - Google are Uber driver's employees. In Australia: no. In California: yes. In the UK: yes.
Suppose I live in State A, but am on vacation to State B. While on vacation, suppose someone living in State C, but currently in State D, accesses my bank account to take money out illegally. The bank has a central headquarters in State E, although my branch of the bank is in State F. In which of these states could I file a lawsuit? Any of them? All of them? The thief would be the defendant in a lawsuit brought by you. The fact that you are on vacation in State B is irrelevant. You can always sue someone where they are domiciled, so State C is one forum where you could sue the thief. You can also always sue a natural person (as opposed to an entity) in a State where they are physically served with process, so if a summons from the courts of State D were served upon the thief while the thief was in State D, then State D could handle the case. You could also probably sue in State A on the grounds that intangible property is deemed to be located where the owner is domiciled and the theft of intangible property was a harm directed a State A. But, there is an argument that if the thief has no way you knowing that you lived in State A as opposed to State F where your branch is locate, that the thief's actions were targeted at State F. State E would not be a very plausible state to argue that there is jurisdiction. A federal district court has geographic jurisdiction only over cases that could be heard in the state courts of the state where it is located, so a federal court case would be brought only in the states where a state lawsuit could be brought. A federal court cases would either have to seek at least $75,000 (since there is diversity of citizenship between you and the thief), or would have to state at least one theory arising under federal law (which might or might not apply to this case). The you can choose which state to file in from those that are available. Which of these states could file charges against the person? A state can prosecute if the crime happened there, or if the crime caused a harm there. In this case the answer to both of those questions could be muddy. Basically, State A or F is probably where the crime caused harm, and it isn't clear from the OP facts where the crime was committed by the thief (we only know where the thief is now). These acts would also probably violate some federal crime that could be prosecuted in federal court, mostly likely the federal courts in State A or State F. Which of these states could file charges against the person? Could the federal government file charges as well? Would more than one prosecution violate the double jeopardy clause of the Fifth Amendment? What if these were countries instead of states? The double jeopardy clause applies to prosecutions within a single U.S. state, and in addition to any state prosecutions, a single prosecution can be made at the federal level. Likewise, prosecutions in different countries do not count against each other for purposes of a double jeopardy clause. Many U.S. states have a binding or non-binding policy of not prosecuting crimes that have already been prosecuted by another U.S. state or by the federal government, the U.S. Justice Department likewise has a non-binding policy of not prosecuting cases which have already been prosecuted by a U.S. state or another country. But these policies do not have constitutional dimensions and are not required by the 5th Amendment. if I use a Canadian Wi-Fi network without authorization from within the United States, would US or Canadian law apply? In criminal cases, choice of law and jurisdiction over the case are the same thing, because a state or country can only apply its own criminal laws. In civil cases, choice of law is a question distinct from jurisdiction. A court applies the law with the most significant connection to the disputed legal issue in question (sometimes more than one set of laws in a multi-issue case), even if it is the law of a different state or country, which is a standard that affords a judge considerable discretion. Either U.S. law or Canadian law could be plausible to apply in this case depending on the detailed circumstances and the legal issue that is disputed.
Both the Due Process Clause and the Dormant Commerce Clause impose meaningful limits on states' ability to tax income on residents. The Due Process Clause requires &quot;minimum contacts&quot; between the state and the taxpayer. Under the Due Process Clause, states may only tax a nonresident's income when there is a &quot;some definite link, some minimum connection, between a state and the person, property or transaction it seeks to tax.” North Carolina Dept. of Revenue v. Kimberley Rice Kaestner 1992 Family Trust, 139 S. Ct. 2213, 2220 (2019). Despite the word &quot;minimum,&quot; there isn't any fixed threshold at which contacts become sufficient to permit a state to impose a tax. Instead, the courts will ask whether the state's assertion of jurisdiction to tax the person offends &quot;traditional notions of fair play and substantial justice.&quot; A critical question in this analysis will be whether the taxpayer enjoyed the &quot;benefits and protection&quot; of the state in connection with the subject of the tax. In your examples, then, you can probably guess how the courts would view each transaction. If you are a Connecticut resident but perform a $5,000 job in New York, you have physically entered New York, likely conducted business with another New York entity, and you can go to the New York courts if the other party breaches the contract by which you earned the money. You have meaningful contacts with the state and enjoy the protection of its laws, so the state is permitted to impose a tax on the income from that transaction. But if you drive from New York to California, your presence in each state is likely highly transient. You pay tolls for using the highways and sales taxes for lunch or something, but you aren't generating any income from those transactions. Your presence in New Jersey would not, for instance, entitle you to go into New Jersey courts to sue for a breach of your New York contract. New Jersey has no meaningful connection to that income, so it may not tax it. But contrast that with your lunch purchase, which creates sufficient connections to New Jersey to permit it to tax that transaction: you are physically in New Jersey, you are protected by New Jersey's food-safety laws, and you can go into New Jersey courts if Burger King intentionally poisons you. So the state can impose a sales tax on that transaction, but not income tax on out-of-state transactions. The Dormant Commerce Clause prohibits states from imposing the &quot;unfair burden&quot; of double taxation on interstate commerce. The Dormant Commerce Clause prohibits the states from regulating, restricting, or substantially burdening interstate commerce without the consent of Congress. The U.S. Supreme Court has made clear time and time again that income taxes violate the Dormant Commerce Clause when they create a risk of double taxation that doesn't exist for taxpayers with no out-of-state business: Adams Mfg. Co. v. Storen, 304 U.S. 307, 311 (1938) (“Interstate commerce would thus be subjected to the risk of a double tax burden to which intrastate commerce is not exposed, and which the commerce clause forbids.”) Gwin, White &amp; Prince, Inc. v. Henneford, 305 U.S. 434, 440 (1939) (“Such a multiplication of state taxes, each measured by the volume of the commerce, would reestablish the barriers to interstate trade which it was the object of the commerce clause to remove.”) Comptroller of the Treasury of Maryland, 135 S. Ct. 1787, 1801-2 (2015) (“The tax schemes held to be unconstitutional ... had the potential to result in the discriminatory double taxation of income earned out of state and created a powerful incentive to engage in intrastate rather than interstate economic activity.”) So even though New York and Connecticut have sufficient contacts from a due-process perspective to permit both of them to tax your business, they many not tax all of your income if not all of it if another state has a claim to it as well. This has of course led to debates over exactly how much of your income New York and Connecticut is entitled to, and the question only gets more complex for businesses with larger footprints. Amazon, for instance, is doing business in every state and territory, so how do we divide its income among the 50+ entities looking to take a bite of those hundreds of billions of dollars in income? For quite a long time, most states used a three-factor calculation that apportioned income among the states based on how much of they taxpayer's property, payroll, and sales were in each state. Oversimplified, this means that if you had 5 percent of your property in New York, 40 percent of your payroll in New York, and 15 percent of your sales in New York, that would average out to 20 percent, so you would pay New York taxes on 20 percent of your income. Over time, the three-factor apportionment method has fallen out of favor, and many states adopted other methods -- especially calculations that more heavily weight the sales factor -- to encourage economic development. Because most large companies have only a small portion of their sales in almost any given state, they can substantially reduce their tax bills by setting up their headquarters in a state that is going to ignore the value of their real estate, equipment, and payroll when calculating their tax bills. tl;dr: Under the Due Process Clause, a state can't impose tax on anything it doesn't have some meaningful connection to. Under the Dormant Commerce Clause, the states have to find a way to make split up taxes that they might share a claim to.
There is no general law making it illegal to lie about debts, or anything else. It is illegal to lie to a law enforcement officer in the course of an investigation. (And of course it is illegal to lie in court testimony or when otherwise under oath.) But it is in no way unlawful to decline to answer, unless a proper court order has been obtained, or other lawful means of compelling an answer. I would expect any law office to respond to such a question with something like "Am I/we being investigated? If so, send the appropriate notice and our lawyer will consider what we should tell you. If not, tell us what information you want, and we will consider and provide a written response in due course." If a taxpayer has been found to be delinquent in paying taxes, in some cases a court order may be obtained seizing assets, including unpaid debts. But no IRS agent can make such a claim on the spot, and indeed for a client to make such a payment without such a court order, or the order of an IRS tribunal (or the creditor's written consent) would itself be unlawful and would subject the lawyer to a suit by the PI (Private Investigator). When the lawyer pays a service provider, a 1099 must be filed with the IRS. If the PI is a corporation, a different form is used, but a record of payment is still required. As failure to timely file such a form is a violation of the tax code, an accusation of paying without filing would permit the lawyer to decline to answer under the Fifth amendment. If the lawyer did pay and did file a 1099 or other documentation, the IRS would know what had been payed, and would not need to confront the PI. Also, as the comment by Hilmar points out, a PI would be likely to use the cash accounting method, and so would own no tax on work performed but unpaid (as yet). So unless the IRS agent thinks the PI was paid "off-the books" and is intentionally failing to report the payment, there would be no point to such a question. And if that were he case, the lawyer would be very likely to decline to answer. I find the story quite implausible.