Foley & Lardner LLP partner Lynn Gandhi offers insights on the taxation challenges a hybrid work environment can pose for human resources and payroll in the Reuters article “Tax attorney: Navigating the nuances of taxation in hybrid work arrangements.”
Gandhi noted that while the human resources departments are authorities on labor and benefits requirements, they can lack experience in payroll taxes. Creating further challenges, she continued, is that payroll is often outsourced, and smaller payroll providers may lack the knowledge of “jurisdictional limitations on state and local tax or multi-state tax.”
Gandhi also discussed the withholding tax considerations for the hybrid worker, convenience of the employer rule, the value of effective communication for tax compliance, unemployment tax considerations for hybrid workers, paid family and medical leave insurance programs, and several best tax practices for employers to consider.
“I personally believe that payroll taxes are kind of the next horizon in the world of multi-state taxation,” Gandhi added. “I remember when sales tax was the poor stepchild, and now that is a very significant tax and I think payroll taxes are going to have their time in the sun, particularly employee withholding.”
