As a participant on the panel for the ENP Forum, here are some helpful pieces of information that may be of interest from the virtual session that took place on April 29th. Listen to the full session here

 

Remote work B LP

Relocated Employees May Have Missed Out on Stimulus Checks

Employees who relocated during the COVID-19 pandemic may have missed out on receiving a stimulus check they may have otherwise received, had they not had relocation expenses added to the income. The addition of relocation expenses caused some employees to exceed the income threshold for receiving a stimulus check. As a result, some companies are compensating these employees for the loss of the stimulus money.

 


 

de-location LP b

Nexus Due to COVID-19

What is Nexus? It’s an important term for companies to know and understand right now.

Nexus is really just a fancy word for “connections” with a particular taxing jurisdiction.1

When an employee resides in a particular destination with connections to a taxing jurisdiction (whether that be a municipality, state or even another country), this allows for your business to be subjection to that jurisdiction's tax laws.

For example, let's say you have an employee residing in California. Having nexus with a U.S. state like California could result in you having to:

  • Pay withholding on wages for employees working in the state
  • Collect local sales tax on sales
  • Deal with state income tax, licenses, etc.

On top of understanding the reasoning for Nexus laws, it's important to note that Nexus laws are always changing and it’s imperative for businesses to stay on top of them to remain in compliance.

"Even before the pandemic, the U.S. Supreme Court had indicated the in-state presence of an employee doesn’t necessarily give the employer nexus there, although some states do not agree. And now, under COVID-19, many experts feel having remote employees shouldn’t create nexus for concerned businesses2."

At the same time, the Pennsylvania Department of Revenue (DOR) stated in August of last year that it will not seek to impose tax nexus for employees temporarily working remotely because of COVID-19. Additionally, the DOR will not impose Pennsylvania corporate net income tax on those same employees.

As of March of this year, 16 states the District of Columbia will not assert nexus on employees who telecommute from a home office on a regular basis, due to the COVID-19 pandemic; however, as the current situation continues to evolve, these rulings can quickly change. It is important to stay up-to-date on nexus statuses in different states.

 

1 https://www.reacpa.com/service/state-local-tax-services/nexus-studies/

2 https://www.corpnet.com/blog/virtual-companies-nexus