May 19, 2020
For businesses not directly impacted by the COVID-19 forced business closures, there have been a number of necessary changes to maintain operations. Restaurants have had to shift from a dine-in experience to delivery or curbside pickup model, manufacturing companies have adjusted supply chains while others have transitioned to a remote workforce environment. Virtually overnight some employees were terminated, some forced to accepted significantly fewer hours and others faced the new challenge of working from home. Since COVID-19 changes came at a lightning-fast pace, many did not have the opportunity to gradually make the transition but were required to make it work “on the fly.” This left little time to consider the challenges and implications of working in a remote environment including communication and production obstacles and even new tax issues. Many are surprised to learn that having a remote employee in another state can create nexus and trigger a tax liability. The good news is Georgia recently announced relief from these rules for those impacted by COVID-19. To help clients, prospects, and others, Wilson Lewis has provided a summary of the key information below.
As outlined in the Coronavirus Tax Relief FAQs, the Georgia Department of Revenue will not use someone’s temporary relocation, directly resulting from the COVID-19 pandemic as a basis for establishing nexus. In addition, for any employee temporarily working in the state, any wages earned will not be considered Georgia income saving the need for the employer to withhold Georgia income tax. These protections will extend for periods of time when:
There are important limitations and exceptions that should be noted. First, if a person remains in Georgia after a temporary remote work requirement has ended then the relief no longer applies. In this situation, the normal rules for determining nexus will prevail and employee wage and employer’s income tax withholding obligation will apply. In addition, wages paid to a non-resident employee, that generally works in Georgia but is temporarily working in another state as outlined above, will be considered to have Georgia wages and the employer is required to continue withholding Georgia income taxes.
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The COVID-19 emergency has created several new financial and tax issues many have not previously experienced. Fortunately, dealing with nexus issues arising from a remote workforce is one that can be crossed off the list. However, it is a good idea to review your adjusted operations to ensure there are no unwelcome surprises waiting. If you have questions about the information outlined above or need assistance with a tax issue or concern, Wilson Lewis can help. For additional information call us at 770-476-1004 or click here to contact us. We look forward to speaking with you soon.