Tax and Employment Law Questions Raised by Remote Work
Understanding the legal implications of telework
The explosion in the number of association workers who now perform their jobs remotely as a result of the pandemic has brought to light a number of state and local issues for employers that have long been simmering. In particular, newly remote employees may render their employers subject to the tax and employment laws of jurisdictions where they previously had little or no presence.
Where remote work has proven to be an effective alternative to traditional workplaces, many employees may expect to be allowed to continue working elsewhere even after it is safe to return to the office, so it is critical for employers to understand the legal implications of continued telework. Following is an overview of key concerns in the areas of state and local tax and employment law compliance for employers with remote workers.
Merely having an employee working for an extended period in another state (even on a part-time basis) can be considered sufficient contact or “nexus” with a state to subject the employer to the state's taxes, including income tax withholding, unemployment insurance premiums, income or receipts tax on the employer, and sales/use tax. While a state may provide for relief from tax reporting and payment obligations for temporary contacts with the state (such as trade shows and conventions), for the most part there is no such relief with respect to remote workers.
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