© 2020 American Payroll Institute, Inc. APA Asks States and Congress for Telecommuting Relief Additional States Issue Nexus Guidance ASubcommittees PA’s Government Relations Task Force (GRTF) on IRS Issues and State and Local Topics (SALT) combined efforts to ask for relief from the administrative burden of withholding income tax for employees temporarily teleworking in their home states because of the novel coronavirus (COVID-19). Additional states have also issued guidance regarding nexus requirements for telecommuting workers (see PAYSTATE UPDATE, Issue 8, Vol. 22). APA action at state and federal levels APA’s requests included expanding existing exemption laws for out-of-state disaster recovery workers to all employees who are temporarily teleworking, creating new state exemptions for these workers, and asking Congress to enact nationwide relief. The GRTF subcommittees asked the states that currently provide an exemption from withholding for emergency responders who temporarily enter a state to work to extend these measures to all employees teleworking because of COVID-19. APA asked the states that require withholding for employees who work in one state and reside in another state to issue an exemption for teleworking employees. At the federal level, APA asked congressional leaders for a relief measure to encompass all states, suspending state temporary presence sourcing rules for income tax withholding for the duration of the crisis. State guidance Colorado. The Department of Revenue (DOR) has provided guidance regarding nonresident disaster relief workers (but does not address nexus for telecommuters). Employers should not withhold state income tax from any wages paid to nonresidents for disaster-related work. The exemption does not apply to resident employees [DOR, Nonresident Disaster Relief Worker Exemption/Subtraction]. Maryland. The Comptroller of Maryland (COM) does not intend to change or alter the facts or circumstances it has consistently used to determine nexus or income sourcing. However, the COM understands that many employers have been required to temporarily alter their workplace model during the COVID-19 outbreak, due to various orders of the governor. Therefore, it will consider the temporary nature of the employer’s model in light of the current situation when making a nexus determination, whether the employer correctly sourced income, and whether the employer properly withheld and reported employee state withholding [COM, Tax Alert 04-14-20B, 4-14-20]. Massachusetts. Effective from March 10 until the state of emergency is no longer in effect, the employer of an employee suddenly working in Massachusetts due to COVID-19 is not obligated to withhold Massachusetts income tax for the employee if the employer is required to withhold income tax for the employee in the other state. Also, an individual who previously performed services outside of Massachusetts and was not subject to paid family and medical leave (PFML) contributions will not become subject to PFML solely because the individual is temporarily working from home in Massachusetts. An individual who previously performed services in Massachusetts but is temporarily working from home outside of Massachusetts solely due to the COVID-19 emergency continues to be subject to the PFML rules [Department of Revenue, TIR 20-5, 4-21-20]. Minnesota. The Department of Revenue (DOR) will not seek to establish nexus for any business tax solely because an employee is temporarily working from home due to the COVID-19 pandemic [DOR, COVID-19 FAQs for Businesses]. North Dakota. If employee telecommuting is due to COVID-19 and is intended to be temporary, the state will not assert income tax nexus on that basis alone and will not require inclusion of that payroll as North Dakota payroll [State Tax Commission, COVID-19 Tax Guidance]. COVID-19-Related Updates on Wage Garnishments and State Tax Levies Swage ome jurisdictions have suspended new or existing garnishment orders, including state tax levies (see PAYSTATE UPDATE, Issue 8, Vol. 22). State creditor garnishment and tax levy requirements that generally apply are covered in APA’s State Guide to Payroll Laws, §§7.1 and 7.2. Alaska. Effective April 4, 2020, until the end of the public health emergency or November 15, 2020, whichever is earlier, the state as a lender or administrator of a loan cannot find a borrower in default or seize or otherwise obtain collateral (e.g., wage garnishment) if the borrower experiences financial hardship related to the COVID-19 public health emergency. In addition to other types of loans, this applies to state student loans issued by the Alaska Commission on Postsecondary Education (ACPE), which is making a disaster forbearance available to borrowers impacted by the COVID-19 pandemic. This forbearance is available to most borrowers and can pause May 4, 2020 Volume 22 Issue 9
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