What makes Colorado cost-prohibitive for pro-work-from-home employers?
March 8, 2015 5:51 PM   Subscribe

I recently went through three rounds of interviews for a promising 100% work-from-home remote job. After a long week or waiting to hear back, I was told that I've been removed from the running due to my home state's tax laws. I'm not sure where to begin fact-checking this, but this is the sort of fact I find irresistible to check, especially given the context. The employer is located in Boston, MA.

The exact wording of the rejection was: Because all of their employees working remotely from home, [employer] has to register as an employer in each state in which they have an employee. There are some states in which the tax rules are really prohibitive for them. Apparently, Colorado is one of those states.

Naturally I'm disappointed and curious in that "do you really want to know" sense, because I don't feel it's a bogus answer but it gets my hackles up. I'm not at all thinking of pursuing legal action or complaining in any official capacity (though it does raise an interesting question about "equal opportunity" for jobs that are intended as a perk to be workable by anyone in the country), but I do want to better understand why my state is undesirable for work-from-home employers.

I did not actively look for this job being currently employed but constantly stressed out (enough to have nearly zero energy to actually look for other work during the rough patches), they found me on LinkedIn and I had several positive interviews before the opportunity disintegrated.
posted by aydeejones to Law & Government (4 answers total) 3 users marked this as a favorite
Do you live in Denver proper? One of the things that sprang to mind is Denver's "Occupational Privilege Tax", which is just a fancy phrase for a head tax. The basic rule of thumb is that a company must pay a tax for any employee earning $500 or more a month; thus any company with employees working in Denver must set up an OTP account to pay the city of Denver each month or quarterly for each individual employee regardless of where the company itself is located.
posted by barchan at 6:05 PM on March 8, 2015 [2 favorites]

Best answer: If the employer has more than $50K of payroll in Colorado, it has Colorado corporate tax nexus. As a result, all of its sales into CO are subject to CO corporate tax. Not every state has this "factor presence" nexus standard; some do.
posted by melissasaurus at 7:07 PM on March 8, 2015 [1 favorite]

I'm a partner in a small software consulting company that has employees all over the US working from home. We had someone in Boulder Colorado for few years. We've also had people in New Mexico, Maine, New York, Ohio, Virginia, Massachusetts and probably other states I'm not remembering right now. I just asked the person who deals with such things whether there was anything particularly difficult about having someone in Colorado and she said, "no".
posted by alms at 2:08 PM on March 9, 2015

Response by poster: I am an Arvada resident. I inquired a little more with the recruiter and they indicated that their client has a really small accounting department and couldn't handle the extra red tape involved with my state on an ongoing basis. I have no reason to believe they were BSing me, it just comes off as such a weird reason, especially with the extra information that it was about extra labor and research rather than potential revenue being reduced.

It was the almost perfect niche-y job for where I am in my life career and skills-wise so a tough pill to swallow, but I suspect they were just overwhelmed with whatever amount of overhead is involved with the "corporate tax nexus" when the accounting department came into the picture. Maybe it really is a lot of work and maybe they just didn't want to go to the trouble of figuring it out and have more influence than I'd expect on the hiring process.

It feels ridiculous and almost like material for a concerned local news story if it were the sort of thing that happened on a large scale (21st century self-styled employers forbidding certain states' residents from working with them), but if it comes down to "small company too small to even look into how challenging it would be to handle a hire" there's not much there there.

The most annoying thing is that their "how we got started" story revolves around how the company is 100% telecommute because they want the best talent across the US, but they basically have an implicit prohibition against any state that poses extra tax considerations and just figured it out with me.

posted by aydeejones at 5:58 PM on March 10, 2015

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