~ Author – Nathan R. Musser, CPA, Deluzio & Company, Tax Supervisor ~
On November 9, 2020 the Pennsylvania Department of Revenue issued some temporary guidance related to teleworking resulting from Proclamation of Disaster Emergency declared by Governor Tom Wolf in March of 2020 related to COVID-19.
For employees, working from home temporarily due to the COVID-19 pandemic is not considered a change to the sourcing of an employee’s compensation. For example, if a nonresident employee who worked inside Pennsylvania before the COVID-19 pandemic but now is working from their nonresident home, their income is still considered Pennsylvania sourced.
On the contrary, for Pennsylvania residents who were working out of state before the pandemic, their compensation would remain sourced to the other state and they would be able to claim resident credit for tax paid to the other state on the compensation.
For Pennsylvania employers with a non-resident employee temporarily working from home due to the COVID-19 pandemic in a state that doesn’t have a reciprocity agreement with Pennsylvania, the department instructs that the employee’s compensation remains Pennsylvania sourced, and the employer is required to withhold on the compensation.
Lastly, if the COVID-19 pandemic caused people to temporarily work from home, the department decided it will not seek to impose Corporate Net Income Tax nexus or Sales and Use Tax nexus based on this temporary activity.
The above reference guidance expires on June 30, 2021, or 90 days after the Proclamation of Disaster Emergency in Pennsylvania is lifted.
If you want to discuss any of the above items, please feel free to contact our office.