Mass. Tax Agency Extends COVID Sourcing For Remote Workers

December 8, 2020

Richard Jones was quoted in the article,"Mass. Tax Agency Extends COVID Sourcing For Remote Workers," published by Law360 [sub. req'd].

In a reversal, the Massachusetts Department of Revenue on Tuesday extended its COVID-19 pandemic-related nexus and income-sourcing rules into 2021, less than a month before the state was scheduled to resume sourcing income based on an employee's presence.

Rich called the change a pretty big surprise, noting that at a conference last month DOR officials seemed to state firmly that the rules would go away on Dec. 31, even though it was already clear then that the COVD-19 emergency itself would continue well past that. "There was no indication then that DOR was considering extending these tax rules past 12/31," he said.

Rich noted that the department has defended the rules as "status quo," temporary and needed because companies couldn't be expected to track employee's remote work locations, especially at the onset of the COVID-19 emergency, which caused a massive surge of newly remote workers. But he said the department also seemed to recognize that even after COVID-19 is over, many employees will continue to work remotely. Jones suspected the DOR wanted more time to work on guidance before pulling the plug on the COVID-19 status quo rules. "Therefore, once the temporary COVID-19 rules expire, businesses, employees and DOR alike will have to prepare for and reckon with the state tax fallout from the new remote work economy," Rich said.

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