Multistate- What Impact Working From Home May Have on Income Tax Nexus APRIL 30, 2020

So many of us are eager to put the new coronavirus (COVID-19) pandemic behind us — to return to the workplace, get our kids back in school, hug our friends and families. Yet even as some states are easing restrictions, others are still encouraging us to stay home.

Of course, the remote workforce established by the COVID-19 pandemic threatens to unleash more instances of old-school nexus, connection based on a physical presence in the state. So, do employees (and their company-owned laptops) establish nexus for their out-of-state employers? They could.

A growing number of states have already stated they won’t enforce certain nexus provisions related to remote employees — at least not for employees who are temporarily working from home to help slow the spread of the virus. These include:

  • Indiana
  • Maryland
  • Massachusetts
  • Minnesota
  • Mississippi
  • New Jersey
  • North Dakota
  • Pennsylvania
  • Washington, D.C.

There are still many unknowns right now. First and foremost, we don’t know how long the current COVID-19 pandemic will last, if it will return after it abates, or if another new coronavirus will take its place. But eventually normalcy will return, even if it’s a new normal. When that happens, we should be prepared for state tax authorities to start looking for ways to replenish their tax base.

For more information: Accouting Web

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By: Gail cole
April 30, 2020