Due to the COVID-19 pandemic, millions of people have been
telecommuting for weeks either from their home state or somewhere
else that they decided to shelter in place. Even as some
states begin to open their economies back up in the coming weeks,
it doesn't change the fact that companies have been allowing
employee to telecommute for a significant amount of time. Allowing
employees to telecommute from states in which they do not normally
work can create a host of issues for employers, but the two big tax
issues relate to nexus and income tax.
First, will the presence of an employee working from home create
taxable nexus for the employer in that state?
Second, for income tax purposes, which state is owed income tax
when an employee is telecommuting from an out-of-state location? Is
it possible that states could have contradictory rules, creating a
double tax situation for many employees? (Spoiler alert: yes!).
