The Covid-19 pandemic has had an impact on our workforce. Companies were forced to quickly respond to a work-from-home model for their employees. Many employees began working from states other than the states in which their assigned offices were located. As a result, questions are being raised such as whether the company will have nexus for corporate income tax and sales and use tax purposes in the states where it has remote employees, should the company begin withholding on wages earned by the employee based on the location of the remote employee and whether the employee should be filing a nonresident tax return in the state in which she is working remotely.
Nexus for Companies – Corporate Income Taxes and Sales and Use Taxes
Generally, states will assert that an employee working from home or remote location within the state will trigger nexus for the company. Nexus is used in tax law to describe a situation in which a business has a tax presence in a particular state, therefore, subjects the company to the state tax laws, such as corporate income or franchises taxes, or sales and use taxes tax.