CPM Multi-State Nexus & Reciprocity 3

Question 1

An employee moves from State A to State B mid-year. Which state's rules govern withholding for wages earned after the move?

Accepted Answer

State B for wages earned after the move, State A for wages before

Answer

Withholding follows the employee's current circumstances; wages earned after the move are subject to State B's rules, while pre-move wages follow State A's rules.

Question 2

Which of the following pairs of states does NOT have a reciprocity agreement with each other (as of current law)?

Accepted Answer

California and Nevada

Answer

California does not participate in any reciprocity agreements, so California-Nevada workers must deal with each state's separate withholding and filing requirements.

Question 3

A company sends an employee to work at a client site in another state for 60 days. The employer is concerned about SUI (state unemployment insurance) liability. SUI is generally owed to:

Accepted Answer

The state where the employee's base of operations is located or where the employee's services are directed from

Answer

FUTA's localization rules assign SUI to one state using a four-part test: localization, base of operations, direction/control, then domicile.

Question 4

The FUTA four-factor test for multi-state employees applies in which order?

Accepted Answer

Localization → base of operations → direction and control → domicile

Answer

FUTA regulations apply the factors in order: first check if services are localized in one state, then base of operations, then direction/control, then domicile.

Question 5

An employee works in three states during the year. For state income tax withholding, the employer must generally:

Accepted Answer

Register and withhold in each state where services are performed

Answer

Each state where an employee performs services generally requires the employer to register for withholding and remit taxes for wages earned in that state.

(CPM) Certified Payroll Manager Practice Test

(CPM) Certified Payroll Manager Practice Test

CPM Multi-State Nexus & Reciprocity 3