Utah amends mobile workforce taxation rules

Utah has amended its mobile workforce taxation rules, which create a taxation exemption for certain employees who work a limited time in the state annually. The amendments also modify the employer’s withholding obligations and penalties associated with that obligation.

The Details:

Beginning with the taxable year starting on or after January 1, 2023, the amendment as enacted by SB 0039 states:

“A nonresident individual's wages may not be considered income derived from Utah  sources if:

(a) the nonresident individual has no other income from sources within this state for the taxable year in which the nonresident individual receives the wages;

(b) the nonresident individual is present in this state to perform employment duties for 20 or fewer days during the tax year; and

(c) the nonresident individual's state of residence:

(i) provides a substantially similar exclusion; or

(ii) does not impose a state individual income tax.

This exemption does not apply to the wages paid to a member of a professional athletic team or a professional entertainer. In addition,  individuals of prominence who perform services for wages on a per-event basis and individuals who perform construction services to improve real property, predominantly on a construction site, as laborers are not covered by the exemption.

Additionally, under the new legislation,  an employer making payment of wages may not deduct or withhold any amount from wages paid to a nonresident individual if the nonresident individual's wages are excluded from state source income under the regulations effective January 1, 2023.

Next Steps:

Employers should review SB 0039 and discuss with their legal and or tax advisor to ensure adherence to the rules effective January 1, 2023.

Have Questions?

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