Telecommuting and Income & State Tax Nexus

We have received updated information regarding the current status of income and sales tax nexus. For your convenience, below are details for states that we believe will be most relevant. If you have questions about a state that is not listed below, please feel free to reach out to us as your earliest convenience.

Delaware:

No income tax guidance (there is no sales tax in DE)

Florida:

No sales tax guidance (there is no income tax in FL)

New Jersey: 

• In the event that employees are working from home solely as a result of closures due to the coronavirus outbreak and/or the employer’s social distancing policy, no threshold will be considered to have been met.
• As long as the out-of-state seller did not maintain any physical presence other than employees working from home in New Jersey and is below the economic thresholds the Division will not consider the out-of-state seller to have nexus for sales tax purposes during this time period.

New York:

No guidance has been issued yet. We will continue to follow.

Pennsylvania:

• The agency will not assert corporate income tax nexus solely on the basis of “COVID19 causing people to temporarily work from home as a matter of safety and public health,” for telecommuting “occurring during the duration of this emergency” (applies to both income tax and sales tax)

Tennessee:

• The Tennessee Department of Revenue replied that it “does not have a developed position” on the corporate income tax nexus implications of employees temporarily telecommuting due to COVID-19 and “has not received any questions about it from taxpayers.” The agency indicated that it “anticipates continuing to update its COVID-19 related guidance available on its webpage as questions arise (applies to both income tax and sales tax)

DISCLAIMER: The WM Daily Update COVID-19, COVID-19 Business Resources and COVID-19 Client News Alerts and other related communications are intended to provide general information on legislative COVID-19 relief measures as of the date of this communication and may reference information from reputable sources. Although our firm has made every reasonable effort to ensure that the information provided is accurate, we make no warranties, expressed or implied, on the information provided. As legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that may modify some of the provisions in this communication. Some of those modifications may be significant. As such, be aware that this is not a comprehensive analysis of the subject matter covered and is not intended to provide specific recommendations to you or your business with respect to the matters addressed.