Changing State Pandemic Relief Provisions for Employees May Affect Your Business

New York, NY — July 8, 2021

At the beginning of the pandemic, many States issued temporary relief regarding the establishment of nexus and/or state withholding obligations for employees working from home. Without this relief, an employee telecommuting from a state other than the businesses' normal location may trigger the establishment of nexus for income tax and/or sales tax purposes for the employer. Additionally, the wages would need to be sourced to the state the employee was telecommuting from, creating additional tax withholding requirements for the employer. The relief simplified compliance in a chaotic time.

Now, as the country begins to return to pre-pandemic conditions, many states are ending this relief provision. For example, Indiana's and Pennsylvania's relief ended on June 30, 2021, and Massachusetts' relief will end on September 13, 2021. If an employee living in those states continues to telecommute beyond the dates indicated, it may trigger nexus and require withholding on wages. Each state's guidance varies and needs to be constantly monitored to avoid any surprise establishments of nexus or overlooked withholding requirements.

If you have employees working from home in States which your business has not filed income, sales or withholding tax returns and have any questions, please consult your Perelson Weiner partner.

Perelson Weiner is a full service Certified Public Accounting and consulting firm dedicated to serving the needs of successful entrepreneurs, high net worth individuals and families and international companies doing business in the United States. Perelson Weiner LLP is a member of the Center for Public Company Audit Firms and the Private Company Practice Section of the American Institute of Certified Public Accountants (AICPA). The firm is a member of PrimeGlobal, the third largest association of independent accounting firms in the world, comprised of over 350 highly successful independent public accounting firms in 90 countries.