Article by Jennifer Karpchuk on “Remote Work: Post-Pandemic Pennsylvania and Phila. Tax Considerations”
In an article published on June 3, 2021 in The Legal Intelligencer, Shareholder Jennifer Karpchuk discusses state and local tax implications employers should consider as they continue to maintain a remote workforce.
“Generally speaking, remote workers trigger “nexus” for purposes of various business taxes, including Pennsylvania’s corporate net income tax (CNIT) and various local business privilege taxes, such as Philadelphia’s business income and receipts tax (BIRT),” explains Karpchuk. “During the pandemic, states were inconsistent in their approach to the question of whether workers forced to temporarily work remotely due to the health crisis created nexus—some states proclaimed there was no nexus waiver, some issued a temporary nexus waiver, while many remained silent.”
Karpchuk further explains that the state of Pennsylvania explicitly provided for a temporary nexus waiver and the Pennsylvania Department of Revenue would not impose nexus on taxpayers by virtue of remote work during the pandemic. This policy expires June 30. It is important for employers to evaluate where a continued remote workforce will impact their obligations for CNIT in Pennsylvania.
“Employers who maintain a remote workforce after that date need to consider, and be prepared to become compliant with, the sales and use tax registration, collection, and reporting requirements that the presence of the remote employee can create,” said Karpchuk.
With June 30 approaching quickly, it is important for employers to revisit their policies and procedures, assess any potential registration requirements or exposure, and ensure they will be in compliance with the various state and local taxes that may be implicated by their remote workforce.
To learn more, subscribers may view the full article here.