Hybrid work arrangements could equate to significant tax savings
For many employees across the globe, the shift to remote or hybrid work environments is highly desired, leading many corporate giants including Google, Microsoft, Citigroup, and Ford Motors to communicate what their permanent hybrid-worker model will look like. Some companies are moving towards a model enabling employees to spend three days in the office and two days remote, whilst others are providing opportunities to be fully remote. In our last blog post, we explored some of the financial risks associated with a workforce that “works anywhere”, but there is also opportunity for considerable rewards on tax savings.
City taxes + remote working = potential savings
Many large US cities apply a number of taxes based on where employees are physically working. Example cities and their taxes include New York City’s 4% Unincorporated Business Tax (UBT), San Francisco’s – Gross Receipts Tax (GRT), Seattle’s Jump Start Tax, LA’s City Tax – the list goes on. In pre-pandemic times, with many companies headquartered in large US cities hundreds of thousands of commuters would cross city lines to get to the office on a daily basis. Many city budgets are underpinned by these local taxes on businesses – New York’s UBT raises approximately $2 billion per year.
With so many companies meeting the demands of their employees for flexible working, more and more employees will be spending more time working from home outside of city limits. The next era of hybrid work could mean tremendous savings for many companies, in fact Topia is helping our customers avoid overpayment of millions per year in taxes.
How much could you be saving in city taxes?
Determining how much you owe as an organization, and the process for filing taxes is notoriously difficult in some cities. This could become more complicated with hybrid workers who might be splitting their week to spend some days in the city and some days working from home. Companies that can accurately show how much time their employees are actually working in the city could drastically reduce their tax burden. Topia Compass can help to eliminate significant tax overpayments and penalties by actively monitoring employee footprint on a jurisdiction-level. For more information on how you can manage local tax complexities for your distributed workforce visit our website.