Lack of physical presence should exempt you from prosecution from a states laws.
They are of course free to capture anything that crosses their border, which in this case ought to mean that your company won’t be able to send money to the state.
Current US employment and business laws are not set up well for remote work at all. Several states say different things about this, and there is probably going to be a reckoning on this subject soon.
I don’t think I should be physically present in the USA just because I transferred money to a USA citizen in exchange for services.
However USA law defines this, I think is wrong. That’s what I’m saying.
The USA is an outlier in many ways. It taxes it’s citizens outside of the country, forces awkward bilateral trade agreements , and is not at all harmonized with work laws of other countries.
An office is a physical presence to me. A single person working from their own house is not.
In my comment, I was referring to the state as the entirety of the US , including California.
But I suppose if your company already is in the USA, you should have to deal with the tar pit if it’s multiple jurisdictions. I hear people who WFH for NYC companies have to pay city tax even if they are in some other US state, so this is really no difference.
The employee is deriving value across the border. The shop itself is in Illinois, where they derive value from bits and bytes within their state. Charge the employee with any tax crimes, not the company.
The value is provided in Illinois, not California. The work is worth nothing to the shop in Illinois while it is in California. The employee shipped the bits to Illinois, blame them for shipping the bits to Illinois. Compensation was provided for the bits in Illinois, not the bits in California. Why would the Illinois company pay for bits locked inside California that they can't access.
The value to the consumer was provided by the company in Illinois, the value to the company was provided by an employee residing in California.
Why would the intellectual property the employee generated be worth nothing simply by originating in California?
In other words, if a bottle manufacturer in Illinois sourced raw glass pellets from a plant they owned in California, they would be deriving value from a source in California. The glass is not worthless because it hasn’t been converted into bottles yet.
The employee is providing intellectual property across state lines, which is why the state can enforce laws on that value that originated from within their jurisdiction.
>The value to the consumer was provided by the company in Illinois, the value to the company was provided by an employee residing in California.
The value to the company was provided in Illinois, with bits inside of Illinois. The company doesn't value bits inside California that it cannot access. They compensated for bits they can actually access within Illinois.
>Why would the intellectual property the employee generated be worth nothing simply by originating in California?
It may be worth something to someone in California before it's exported, but that transaction never happened. In this case though the actual transaction took place in exchange for a product inside Illinois.
>In other words, if a bottle manufacturer in Illinois sourced raw glass pellets from a plant they owned in California, they would be deriving value from a source in California. The glass is not worthless because it hasn’t been converted into bottles yet.
This is actually a great example. I buy ammunition online from a company in Oklahoma, where all the business and employees of the ammunition company resides. Yet I pay sales tax here in <my state> based on recent court rulings regarding 'internet sales tax' which state the tax is where the transaction took place (/the finished product goes to), not where the company and/or workers physically resides. It wouldn't make sense at all for me to pay sales tax to Oklahoma, even though the ammunition and even all the physical presence was initially generated there. I pay sales tax where the transaction and actual value to me, the buyer of the goods, actually are. Using the same analogy from this court ruling, you would pay tax on the IP you bought in Illinois and not where it was initially produced California.
>The employee is providing intellectual property across state lines, which is why the state can enforce laws on that value that originated from within their jurisdiction.
The employer is buying IP within their state lines of Illinois. You may be arguing the 'employee' is actually misclassified and is an illegal exporter who is a business owner in California with an export and bit smuggling business. Go after this 'employee' (bit smuggler), not the person buying bits in Illinois.
> The value to the company was provided in Illinois, with bits inside of Illinois. The company doesn't value bits inside California that it cannot access. They compensated for bits they can actually access within Illinois.
Your comment confirmed that the value originated in one place, California where the company could not access it, and was transferred to another place, Illinois where the company could access it. The employee was compensated for the transfer of this value. That is interstate commerce, and therefore the jurisdiction of the originating state, California, can apply.
> It may be worth something to someone in California before it's exported, but that transaction never happened. In this case though the actual transaction took place in exchange for a product inside Illinois.
The company in Illinois compensated the employee for their time to generate intellectual property, so the company valued their work and exchanged payment to the employee for exchange of that value. So then the work clearly has value prior to being packaged and sold to the end customer.
> I buy ammunition online from a company in Oklahoma, where all the business and employees of the ammunition company resides. Yet I pay sales tax here in <my state> based on recent court rulings regarding 'internet sales tax' which state the tax is where the transaction took place, not where the company and/or workers physically resides.
The exchange of value and compensation between a company and their employees is governed by employment law. You seem to have conflated the concept of an employee with that of a business or an independent contractor, which are not the same thing, and are not governed by the same laws. When you hire employees across state lines, you are extending your business operations across state lines, and are subject to state jurisdiction. That is the cost-benefit trade-off of hiring outside your state, if you hired employees outside your country, for example in Canada or Mexico, then you would be beholden to inter-national laws governed by treaties.
> The employer is buying IP within their state lines of Illinois.
No, the business is not "purchasing IP within their state lines", the business is employing a person who resides within another state, and therefore the business must abide by the employment laws of the employee's state, as well as the business state of origin. An example of buying IP would be purchasing a legal contract template, or a software license. In the examples I provided sales tax for the state where the purchase originated would apply.
> You may be arguing the 'employee' is actually misclassified and is an illegal exporter who is a business owner in California with an export and bit smuggling business. Go after this 'employee' (bit smuggler), not the person buying bits in Illinois.
I'm unsure if you are trolling or just very confused, but your statement makes no sense and does not fit within the logical framework of United States inter-state commerce law. Employees are not classified as an independent business, they are and extension of a business's operations.
>That is interstate commerce, and therefore the jurisdiction of the originating state, California, can apply.
States are divested of the power to regulate interstate commerce. This is squarely jurisdiction of federal government, not the states.
>Your comment confirmed that the value originated in one place
The bits originated in California. The value originated in Illinois. It was valueless to the company while locked in California. Perhaps it was valuable to someone else who never made the transaction in California, but not to the company in Illinois who actually paid for it.
>The company in Illinois compensated the employee for their time to generate intellectual property,
If the employer were simply paying for time then why not hire a prisoner or a nice retired old lady to sit in a chair for 8 hours a day? We both know they aren't paying for time, they're paying for the useful bits they have in Illinois. They want the IP, not to burn people's time.
>So then the work clearly has value prior to being packaged and sold to the end customer.
It has value to the customer in Illinois, not in California. It is valueless to the customer locked up in California. It has value perhaps to the employee in California, but not the employer (customer).
>You seem to have conflated the concept of an employee with that of a business or an independent contractor, which are not the same thing, and are not governed by the same laws
I haven't conflated, I'm showing the courts contradict themselves. They say it's fair game to charge sales tax even with no physical presence, with no tax paid to the other state with physical presence, but then want the exact opposite if you buy IP from an 'employee' instead of bullets from a company. It makes no sense. They want to have their cake and eat it too. One may argue such wishy-washy behavior is 'arbitrary and capricious' which could cast doubt on whether their rulings are even enforceable.
>No, the business is not "purchasing IP within their state lines", the business is employing a person who resides within another state, and therefore the business must abide by the employment laws of the employee's state, as well as the business state of origin. An example of buying IP would be purchasing a legal contract template, or a software license. In the examples I provided sales tax for the state where the purchase originated would apply.
We simply disagree here. I see that they are purchasing IP within their state lines, you see something completely different.
>I'm unsure if you are trolling or just very confused
I could say the same for the state of California. It seems they are trolling to go after someone in Illinois for buying bits in Illinois.
Once it was in Illinois it had value, before that it didn't have value to the buyer. Again it was useless to the Illinois company while locked up in California.
California wants to regulate interstate commerce, which of course is flatly unconstitutional. California's tax board is a clown circus of petty tyrants who have tortured and subjugated their victims for far too long.
> States are divested of the power to regulate interstate commerce. This is squarely jurisdiction of federal government, not the states.
It's not as simple as that. States can indeed apply their laws to interstate commerce in a myriad of ways, but not to the degree that the U.S. federal government can. States for example can force e-commerce companies to apply sales tax to purchases made by customers based in the given state, even though the business is based in another state. By your logic, the state should only be able to enforce their laws on the resident customer, but that's not true, they can apply their law to the online retailer who doesn't have a presence in the state and force them to collect the taxes on the state's behalf and remit the taxes to the state. [0]
As a second example, a state's minimum wage laws apply to any person who resides within the state, even if that person works remotely for a company based solely in another state. If you have a company in Illinois, your minimum wage is $12.00 per hour. If you employ a person who resides in California for remote work, you still must pay them the California minimum wage of $14.00 per hour. You must also adhere to other labor laws for the employee who resides in California for overtime, maximum hours worked per day, and others. [1]
> We simply disagree here. I see that they are purchasing IP within their state lines, you see something completely different.
We do disagree, but your opinion also disagrees with one-hundred years of U.S. employment case law, and so I would argue is factually incorrect.
>By your logic, the state should only be able to enforce their laws on the resident customer, but that's not true, they can apply their law to the online retailer who doesn't have a presence in the state and force them to collect the taxes on the state's behalf and remit the taxes to the state. [0]
Which of course is insane and shows the dire state of constitutional crisis in our nation.
>minimum wage laws
Another horrible kick in the teeth to the poor -- outlawing work for the lowest on the rung of the economic latter. Minimum wage laws are an argument against this legislative tyranny, not for it.
>We do disagree, but your opinion also disagrees with one-hundred years of U.S. employment case law, and so I would argue is factually incorrect.
I count that as a pro, not a con. The last 100 years of legislation in the US is the biggest swath of which ought to be eliminated, IMO. Starting with the 16th amendment.
Under literally more than a century of law, domestic and international, the company is deriving value from the employee's work based on where the employee is physically sited.
So basically, you're just arguing against more than a century of essentially universal law.
Free mobility of labor is being hindered by these outdated laws. Either the state should harmonize taxation and figure this out between themselves or companies who do WFH to people living in other states should be considered as hiring independent contractors always.
That the federal government can’t or won’t step in and help people in the USA out of this morass is shameful. That’s my value judgment.
They are of course free to capture anything that crosses their border, which in this case ought to mean that your company won’t be able to send money to the state.