Article by Jennifer Karpchuk and Katherine Noll on “What’s Your Plan? Avoiding Tax Pitfalls of a Remote Workforce”
In an article published on June 18, 2021, in Bloomberg Tax, Shareholders Jennifer Karpchuk and Katherine Noll discuss how the pandemic ushered in a remote working environment unlike anything companies had ever experienced, many forced to adapt overnight.
“Thus, for many companies remote work is here to stay,” explain Karpchuk and Moll. “Yet, many companies do not have a plan—particularly a tax plan—for what parameters can and should be set for remote workers.”
Karpchuk and Noll further explain how employers should be prepared to answer whether employees must work from their state of resistance while working remotely or if they can work from anywhere. The reason this plan is important is due to the basic principle of state and local taxation nexus.
“There must be a substantial connection between a taxpayer and the taxing state seeking to assert a tax obligation on the out-of-state taxpayer,” said Karpchuk and Noll. “Remote workers can create that substantial nexus by virtue of their physical presence, working from home (or elsewhere), within a taxing jurisdiction for as little as one day.”
Karpchuk and Noll advise that given the varying tax rules, a company’s plan should include the adoption of specific policies and procedures that address remote workers, while also being mindful of the tax implications of such policies and the data they will require from employees to report their remote work location.
To view the article on Bloomberg Tax click here.