I need help from all California experts. My client has a company in Colorado they recently received a letter from FTB about an employee that telecommutes for their company in Colorado from the employees home in California. This was news to me (the employee in CA). They have no business, sales, property, equipment, advertising, rent or anything else in California. My understanding is the employee moved to California and my client wanted to retain the employee's particular skill set. They do not pay anything to the employee other than wages. The company uses a payroll company and has paid all the CA SWT & OASDI etc on this employee. This employee uses their own computer and logs into my clients web portal every day and preforms via web, duties in Colorado.
FTB is requesting that a FTB4694 be filled out regarding if they need to file a State Tax return in CA. I do not believe that my client has Nexus in CA. I am leaning toward part 2 of the 4694 No filing requirement. Clients answers to part 2 are all NO's. Am I wrong? Is this a can of worms, better addressed by an attorney?