January 13, 2022

State Tax Treatment of Remote Workers

State Tax Treatment of Remote Workers State & Local Tax

The COVID state of emergency ended for state tax employer treatment of remote workers. Now what?

Many states, including Rhode Island and Massachusetts, issued emergency orders and guidance associated with the COVID-19 states of emergency. This included implementing emergency pandemic income sourcing rules to businesses for wages paid to employees who worked remotely due to the COVID-19 Pandemic. 

These states continued to treat employees as employed in the state of their pre-pandemic office location, even though their remote offices may have been situated in a different state. Effective September 13, 2021, this temporary emergency treatment terminated in Rhode Island and Massachusetts. Remote workers are now considered employed in the state of their remote offices. Other states’ effective date of termination may differ. This change may result in your business having new filing requirements in the states where your remote workers are situated. Below are some filings for you to consider:

  • State income tax and TDI/FMLA withholdings
  • State unemployment taxes filings
  • Sales and use tax filings
  • Workers’ compensation insurance coverage
  • Corporate franchise and income tax return filings
  • Secretary of State registrations