COVID-19 temporary shelter-in-place paradigm could trigger new state income, sales and use, or employer withholding tax obligations.
According to our American partner, Alvarez and Marsal, many states in the US granted temporary tax nexus relief for businesses with employees teleworking from their residences in a different state than the employer’s location due to the COVID-19 pandemic. The rules governing whether a state or locality can impose tax on a business are complex, and the failure to comply with the taxing authority’s filing requirements can come with steep penalties.
The article breaks down key dimensions of state tax nexus rules and provides insights into the implications and traps for the unwary.
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