Collect Taxes From Out-Of-State Workers

By CPA Jeff Yourkovich

Here is a novel approach to fixing West Virginia’s budget and financial woes: Let’s raise taxes, increase the sales tax, charge a user fee, cut services and slash payroll.

Sounds like the ideas you hear every day in the news, right?

That was not the idea I was thinking about. Instead, how about we enforce rules we already have on the books?

Wait, what? You mean there are tax rules that no one is enforcing?

The gas and oil industry is here and here to stay for quite some time. Every third car on the road has out-of-state plates. West Virginia law says that if a worker works in the Mountain State more than 30 days then the workers’ earnings are subject to state taxes. This law does not affect workers that live in reciprocity states like Ohio and Pennsylvania.

So, why doesn’t the West Virginia State Tax Department enforce this rule? We asked the state Tax Department how they are enforcing this. Tax office employees responded by stating they check employers with West Virginia addresses against unemployment reports to discover non-filers.

Well, the employer has an out-of-state address, so that’s not going to work.

We asked the State Tax Commissioner Mark Matkovich what his department is doing to address the issue, and he responded that, “It is not that big of a deal.”

OK, West Virginia, how about you and I pay when they pay? Sound fair?

Subscribe to Weelunk

The worker is not going to automatically pay West Virginia taxes unless somebody makes them. Volunteering to pay another state’s taxes? Yeah, right.

But, if the employer would withhold West Virginia taxes from his or her paycheck, then the employee would have to file a West Virginia non-resident tax return. By filing this return, the Mountain State would receive individual income tax revenue.

So, why doesn’t the employer do this? Same reason. Nobody is telling them they have to, and there is no enforcement.

I am not saying we don’t want these out-of-state workers. I am glad they are here. They are building up our community, keeping our local restaurants and bars busy, staying at our increased number of hotels, and they are buying at our stores.

I would just like to see our state government, and in particular our tax department, step up. Enforce the rules we already have on the books. Enforce out-of-state employers to withhold West Virginia taxes on the employees working in West Virginia.

It is also time for our recently elected legislators Storch, Fluharty and Ferns to take a stand. Don’t just promote job creation, but enforce job and tax equalization to the extent that these companies and workers are paying what they are legally responsible for in the Mountain State.

Or if you really want to promote job creation, hire a dozen recent college graduates and let them work off a 25 percent commission off all the additional revenue they bring into the state.

Either way, West Virginia wins.