[e40]

Words of advice, though, if the business is in CA don't hire contractors via 1099 unless the work really does fall under the legal definition of what a 1099 can be used for (in CA). If they appear to be an employee, in any way, then they should be an employee. The CA EDD loves auditing and assessing back taxes and fines. And all it takes is a disgruntled contractor to call the EDD.

[Enginerrrd]

>And all it takes is a disgruntled contractor to call the EDD.

Less than that! In the event of a random audit, they will aggressively try to reclassify 1099 contractors that have no interest in being employees and don't meet the definition in any way.

[aquark]

Any idea how CA handles (small) foreign companies hiring contractors in CA?

Assuming they did decide to quibble about the classification what can they actually do to an entity that has no legal existence in the US?

[hnburnsy]

They probably only go after those in the US as they can garnish bank accounts at banks that they can reach as they currently do to Arizona businesses they claimed were doing business in California...

"Making matters worse, if California’s tax assessments are not paid voluntarily, California frequently further tramples on the sovereignty of other states by issuing orders to interstate banks, demanding that they transfer funds in Arizona-based accounts for back payment. Those seizure orders threaten the banks that, if they do not transfer the funds, California will take the taxes and penalties owed from the banks instead. Not surprisingly, the banks almost uniformly consent to California’s strong-arm tactics.

Exhibit G in the filing provides an example where California demanded that Wells Fargo not only transfer the $800 tax, but also a $200 “demand penalty,” a $432 “late filing penalty,” a $79 “filing enforcement fee,” and $63.40 in interest, for a “Total Tax, Penalties, Interest and Fees” of $1574.40."

https://www.azag.gov/press-release/arizona-attorney-generals...

[e40]

Pretty sure @hnburnsy is right. They're not going to spend the resources to track down non-US entities, I would bet a fair amount of money.