In response to the COVID-19 pandemic, many US states have declared states of emergency and imposed temporary social-distancing measures and other restrictions. Many businesses, in turn, have implemented work-from-home requirements for their employees. Since March, many employees have been required to work remotely and leverage technology and new ways of working to accomplish their jobs.
It’s no surprise that organizations are rethinking their long-term workforce and workplace strategy to consider a hybrid work-from-home model that allows flexibility as to where employees work. However, what may be a surprise is that these changes may have significant unexpected state tax implications and could create potential tax risk for both individuals and their employers. Even the presence of a single employee in a state could result in a company being subject to tax obligations in a state where it had no prior filings or did not conduct business in the past.