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Missouri Question


Corduroy Frog

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An Alabama client is going to send one of their Alabama residents to Missouri for 90 days.

How long can he stay in Missouri without having Missouri SIT to begin? 

If he has MO SIT withheld it won't affect his state taxes because he will have a credit to apply as an Alabama resident.  However, there is administrative cost for the client as well as the guy will have to file a Missouri non-resident return.

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5 hours ago, Corduroy Frog said:

An Alabama client is going to send one of their Alabama residents to Missouri for 90 days.

How long can he stay in Missouri without having Missouri SIT to begin? 

If he has MO SIT withheld it won't affect his state taxes because he will have a credit to apply as an Alabama resident.  However, there is administrative cost for the client as well as the guy will have to file a Missouri non-resident return.

I think the more important consideration is whether or not this business client will have nexus in Missouri and will it be transacting business there.  What will be the nature of this employee's work in the state of MO?

As a start, Missouri website has this on a page for foreign LLCs but is general enough to apply to all entities doing business there. Bold is mine and may not be representative of your client's actual fact pattern:

Quote

Transacting Business in Missouri

According to Missouri’s LLC Act, you are required to register your foreign company with the state of Missouri if you are “transacting business” in Missouri. What does this mean? Well, like most states, Missouri’s LLC Act does not specifically define what the phrase “transacting business” means in relation to foreign registrations.

However, state laws governing when foreign companies must collect state sales tax in their state provide some guidance on the issue. Under these laws, a business must have a physical presence in—or nexus with—the state in order to be required to collect state sales tax on sales to that state’s residents. Generally speaking, physical presence and nexus are synonymous, and mean having:

  • a warehouse in the state
  • a store in the state
  • an office in the state, or
  • a sales representative in the state.

Certain exceptions may apply and the rules get more complicated with things like Internet sales. Nevertheless, in general, if you have an office, a store, a warehouse, or employees in another state, you will need to qualify your LLC as a foreign company in that state. For more details, including some possible distinctions between physical presence and nexus, check Nolo’s articles on Internet Sales Tax: A 50-State Guide to State Laws.

Certain Activities Are Exempt

Like most states, Missouri’s LLC Act specifies certain activities that do not constitute transacting business in the state. The items listed include:

  • defending or settling a lawsuit
  • dealing with internal business affairs such as holding member or manager meetings
  • having a bank account in the state
  • borrowing money or creating debts, mortgages, or liens on, or other security interest, in real estate or personal property
  • securing or collecting debts
  • transacting business in interstate commerce, and
  • conducting an isolated transaction that is completed within thirty days and is not in the course of similar, repeated transactions.

For the actual legal description of each of these items, check Section 347.163.5 of the Revised Statutes of Missouri. If your LLC’s only activity in Missouri is one or more of the listed items, you should not need to register with the state.

 

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If the employer is not already doing business in MO, the employer will need to register in MO, get an SEIN, MO UI issues, WC insurance, local taxes if any, business license for the state/locality, etc.  In other words, the employer is setting up business in MO, and needs to act accordingly, the length of time is not material.

The business owner should have no concern with the employee's personal taxes, and withhold based on the employer's obligations, even if it means more than one state withholding based on location worked.  The business owner should consider the costs of the new location before accepting the work (if they are new to the location).

Covid has caused some states to create or lengthen work from home exceptions, and many employers simply ignore work from home in another jurisdiction situations anyway, but this sounds like a physical work location change into a new state for the employer.

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