Tax ramifications for the hybrid workplace

With many employees no longer working at the business’s physical office locations, businesses need to evaluate their evolving footprint and the operational, legal, and tax implications a hybrid workplace presents.

Employees working across state lines can now expand a business’ pre-pandemic boundaries, for example. In these cases, businesses should consider whether the presence of employees trigger physical presence nexus in new jurisdictions, which can potentially create a host of costly new tax compliance obligations and liabilities.

Tax compliance considerations of a remote workforce for both the employer and the employee can include:

• Payroll taxes
• Corporate income taxes
• Personal income taxes
• Sales/Use taxes
• Excise taxes
• Miscellaneous taxes (i.e., local taxes)

Employee telework can also impact:

• Unemployment insurance
• Workers’ compensation coverage
• Secretary of State registrations and filings
• Personal domicile and residency presenting both risks and opportunities for individual taxpayers

• Nexus Studies
• “Convenience of the Employer” review
• Determination if employee presence in new states creates nexus for:
  • Income tax purposes and/or
  • Sales tax purposes