Two states have issued guidance regarding nexus and withholding requirements for employers that may have employees working from remote locations temporarily due to the COVID-19 outbreak. More states may issue similar guidance in the future.
Mississippi
During the period of national emergency, Mississippi will not change withholding requirements for businesses based on an employee’s temporary telework location. Mississippi residents are taxed on their total income, regardless of where they work. The Mississippi Department of Revenue (DOR) will not impose any new withholding requirements on the employer. Mississippi will not use any changes in the employee’s temporary work locations due to the pandemic to impose nexus or alter apportionment of income for any business while temporary telework requirements are in place [DOR, News, 3-26-20].
New Jersey
The New Jersey Department of Revenue (DOR) issued an FAQ regarding COVID-19-related telecommuting. The DOR will temporarily waive the impact of the legal threshold within state tax laws and regulations which treats the presence of employees working from their homes in New Jersey as sufficient nexus for out-of-state corporations. If employees are working from home solely as result of closures due to COVID-19, no thresholds will be considered to have been met. The DOR would not require employers to change the current work state set-up in their payroll systems for employees who are now telecommuting or temporarily relocated out of state for a temporary situation.
Interested in more state and local payroll coverage? APA’s PayState Update eNewsletter is perfect for you.
Lia Coniglio, Esq., is Managing Editor of PayState Update and Manager of State Payroll Information Resources for the APA.