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Working Remotely question

Hi There, hope you all are well. I work for a bank, and all of our "back office" folks have been working remotely during this pandemic. We had offices in all States that the employees live in, so it wasn't an issue as far taxation goes. Now we are hiring someone, who will be working remotely from a State that we do not have a business presence in. Am I correct in thinking that this would basically constitute a business presence and I need to get us set up and file taxes within that state (there is no nexus if that makes a difference)? Is there any way around it (I am being asked to look.....). Thank you, Kathie

Comments

  • Generally, this would create nexus - some states have a de minimus amount of time that can be spent in the state without creating nexus. Some states have also waived nexus creation for working from home under shelter in place orders or other reasons related to the COVID-19 pandemic. So, you will have to check with the particular state that is involved to see what their requirements are.

  • Generally once you have an employee working in the state you have created nexus and would have to establish withholding and unemployment tax accounts for payroll. As Patrick state, some state have a de minimus # of days. How long will the employee be WFH. If this employee is going to be working in another location after Covid restrictions are lifted, you may want to, anonymously, call both states and explain they were hired to work in State "A", but because of Covid they are WFH in State "B". State "B" is probably going to say they want the taxes. Be clear the intent was never for the employee was to work in State "B". Most state have not put out full guidance on the WFH during Covid. The state which have put out statements have said do not update employees' taxation due to Covid. You have an out of the ordinary situation particularly at this time.

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