Remote-Worker State Tax Nexus

A single remote employee working from a state where an association has no office, no board meetings, and no other operations can be enough to create a state payroll-tax withholding obligation, and in some states a broader corporate nexus obligation, for the entire association. NANA's position is that this outcome is disproportionate: an association that hires one remote grant writer or membership coordinator living three states away from headquarters should not need to register as a foreign entity doing business in that state, but under current law in many states, it does.

Chief Operating Officer and CFO Lorraine Petrakis has flagged this as one of the more consequential quiet risks in NANA's own compliance picture, since the rules were largely written before remote work was common and were aimed at companies deliberately establishing a physical presence, not associations that simply let one employee live somewhere other than the headquarters city.

Any association with even one remote employee outside its headquarters state is potentially affected, and remote and hybrid staffing has become routine across NANA's membership since 2020 — the Pacific Northwest chapter's remote-first staffing guide documents several member associations running entirely without a shared office. The exposure scales with how many states an association's remote staff live in: an association with remote employees in six different states may need six separate payroll-tax registrations, each with its own withholding tables and filing calendar, for a staff that might total only a dozen people.

The risk rarely surfaces immediately. A state typically identifies the gap through a routine wage-report cross-check, sometimes years after the remote hire started, at which point the association can owe back withholding plus penalties for a period it never registered for, because no one on staff realized a single remote hire had created the obligation in the first place.

NANA is asking for a federal "convenience of the employer" safe harbor that would exempt small employers — associations with a modest headcount and a small number of remote employees per state — from corporate nexus and simplify payroll-tax withholding to the employee's state of residence alone, rather than requiring the employer to track and remit under every state where a remote employee happens to live. Several states have adopted reciprocal agreements informally, but there is no uniform federal standard, which means the safe harbor an association gets depends entirely on which two states are involved.

Until such a safe harbor exists, NANA's brief and the Pacific Northwest staffing guide both recommend associations map every remote employee's state of residence now and register proactively, rather than waiting for a state to identify the gap on its own.