We have a prospective new client that feels that any distributions made to former employees who have moved to another state must have withholding taken out of their distributions for that state. Other than a new rule effective Jan. 1 in Nebraska for mandatory state withholding we don't want to have to comply with that suggestion and/or have to research into each state we may have a payee address for to determine whether or not we have to withhold income taxes for that state, set up a state tax id number, and comply with remittance instructions.

Does anyone have any suggestions or guidance on this issue? Thanks

Here is an interesting discussion that, although relevant, will probably result in more questions than answers.

If someone moves to a new state, their withholding must be based on their new state of residence ( domicile). This went into effect 01/01/1996, under the Public Law No. 104-95 (Jan. 10, 1996), which prevents states from taxing former residents on income received from retirement asse

How do we tackle the issue of trying to figure out which states require withholding, at what rates, and how to remit? Doesn't appear to be cost effective.