Financial Services Manual (FIN)

Effective: 1/1/2009

Revised: 9/12/2011

FIN 420–08: Out-of-State Employees—Authorization and Related Costs

Purpose

To summarize the requirements for hiring and/or (re)assigning employees who work at a site not located within the State of Arizona and the related costs of such arrangements

Sources

IRS Publication 15-A, Employer’s Supplemental Tax Guide (Supplement to Publication 15 (Circular E), Employer’s Tax Guide)

Arizona Revised Statutes § 43–104, Definitions

Arizona Revised Statutes § 43–403, Employment excluded from withholding

Applicability

Employees of Arizona State University whose primary work site is located outside the State of Arizona

Background

Work performed by employees of ASU in a state other than Arizona may be subject to all state reporting, taxation, and employment regulations of the state in which the work is performed.

Policy

Employees of ASU who work primarily outside the State of Arizona may be subject to all employment-related laws of the state in which they work.

State taxes, employment tax, and worker’s compensation provisions vary from state to state. Financial Services-Payroll Services is responsible for compliance with these rules. The hiring or reassignment of employees to positions outside of Arizona must be supported by a university business purpose and not be merely an accommodation to the employee.

Per-capita administrative costs for out-of-state employees are high due to the extraordinary costs to ensure compliance with various state laws and reporting requirements and due to the limited number of employees working in other states, usually one or two per state. The department that hires the employee is subject to a quarterly administrative cost reimbursement fee for each out-of-state employee. A schedule of costs will be maintained by Financial Services, Payroll Commitment Accounting and applied accordingly.

Procedures

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Approval

The vice president or vice provost from the area where the new employee will be assigned must approve the new hire or reassignment in advance. The department that wishes to hire the employee must submit an Approval of Out-of-State Employee (New Hire or Relocation), which includes the business reason for the out-of-state assignment, to Financial Services-Payroll Services.

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