MNCPA signs letter urging congressional support for state tax filing relief for remote workers
September 14, 2020 | Linda Wedul
My sister recently announced she and her husband were becoming digital nomads. They live on the East Coast, but for the next three months they’re renting an Airbnb in Washington state. They will return home for a bit and then set up in the Southwest for another three months. Their jobs can be done fully remotely; their respective managers approved the arrangement and HR was informed. Fortunately, they work for a large international company that has all the systems in place to track hours and collect and remit the appropriate state taxes.
In another conversation, a member shared that employees had opted to temporarily work from their parents’ homes -- but had never informed their manager they would be out of state. They were getting their work done but didn’t realize their physical location impacted their state withholding. This local business doesn’t have systems in place to monitor where an employee is physically located and adjust payroll tax withholdings accordingly. The company suddenly had a problem; how many other staff were working in another state on a regular basis?
COVID-19 is demonstrating again that government rules and regulations do not reflect the current environment and instead, adds additional burdens to taxpayers and companies trying to comply. Remote work and mobile workforces aren’t new concepts. However, the pandemic elevated the need for employees to have remote work options, and the ability for first responders to cross state lines.
There are several benefits to having a remote and mobile workforce, but one of the major challenges is the increased state and local tax compliance burden. States have differing nexus and withholding rules, making the impact of having an increased number of telecommuting employees especially tricky to track. Without clear guidance, there’s the risk that employers and employees are liable for nonresident taxes and withholding and reporting requirements.
In response to this challenge, the MNCPA joined more than 120 employers and organizations across the nation in signing a letter to Congressional leaders
urging them to support state tax filing and withholding relief for remote workers during the pandemic. The accounting profession has been consistent in its support of state tax filing relief for remote workers. Today, with an unprecedented number of workers working remotely, it’s imperative that Congress pass legislation to adapt to our current economic reality.
We shouldn’t burden business owners and employees with unexpected tax penalties. Enacting this legislation will help our state and country start on the path toward economic recovery and growth.
Topics: Government, SALT
Linda Wedul is president and CEO of the MNCPA. She’s usually spotted at MNCPA events, introducing herself to members with a warm smile and memorable laugh. Mixed among the Footnotes, accounting journals, leadership books and three monitors in her office, you’d be surprised to see a dog kennel. Her unpaid job is volunteering as a foster family for service dogs in training through Can-Do-Canines. She and her husband have two adult children and live in Farmington. Linda can be reached at 952-885-5516 or firstname.lastname@example.org.
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