New Jersey is temporarily waiving corporate nexus arising from employees teleworking due to the COVID-19 pandemic—a response to the crisis that other states should follow.
When employees work in a state in which their employer does not otherwise operate, that can give their employer sufficient contacts (“nexus”) with the state to be subject to its tax code. Corporations are normally intentional about their decisions to locate employees or assets in states where they otherwise lack nexus, as it can expose them to meaningful tax burdens and potentially high compliance costs.
Yet that’s exactly the situation many businesses can find they are in now that many have implemented telework protocols in response to the COVID-19 pandemic. And unless states follow New Jersey’s lead, the results can be costly and inequitable.
New Jersey, recognizing the complexity to which this gives rise, and the degree to which this additional tax nexus is generated by matters outside of businesses’ control, is temporarily waiving the impact of its nexus laws as applied to employees “working from home solely as a result of closures due to the coronavirus outbreak and/or the employer’s social distancing policy.”
For the Full Story: Tax Foundation New Jerseytax foundation new jersey
by Jared Walczak
march 31, 2020