Pennsylvania has announced that, effective July 1, 2021, the temporary income tax telework and corporate income and sales and use tax nexus guidance will end. This guidance waived certain residency and nexus requirements due to employees temporarily working from home during the COVID-19 pandemic.
Under the telework guidance, the PA Department of Revenue would not consider an employee working from home temporarily due to the COVID-19 pandemic, to have changed the source or situs of their compensation. For PA residents who were working out of state before the pandemic, their compensation would remain sourced to the other state even though they are temporarily working from their PA home. Conversely, for non-residents, their compensation would continue to be sourced to PA. The PA Department of Revenue, under the telework guidance, also did not change the employer’s requirement to withhold PA income tax, imposition of Corporate Net Income tax or Sales and Use tax due to employees temporarily working from home.
As of July 1, 2021, however, this temporary guidance is no longer in effect. Businesses need to evaluate their current activity and working situations for employment tax, income tax, and sales and use tax purposes under the pre-Covid-19 telework rules.
If you have questions, please feel free to contact our office for assistance.