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NJ Gives Telecommuting Tax Guidance Amid COVID-19

By James Nani · March 31, 2020, 7:47 PM EDT

New Jersey will temporarily waive corporate nexus for out-of-state businesses if employees work from home solely as a result of the COVID-19 outbreak, the New Jersey Division of Taxation has said.

In a short note posted on its website on Monday, the division said it would temporarily waive the impact of the legal threshold in state statute that treats employees working in New Jersey as sufficient nexus for out-of-state corporations. The waiver would apply when employees are working from home solely as a result of closures due to the coronavirus outbreak or an employer's social distancing policy, the division said.

Mississippi has taken a similar position on telecommuting nexus.

The division on Tuesday also released guidance on how the division, businesses and individuals should treat payroll taxes in light of the COVID-19 pandemic.

The division said generally state sourcing rules dictate income is sourced based on where the service or employment is performed based on a day's method of allocation. But during the temporary COVID-19 pandemic, wage income will continue to be sourced as determined by the employer in accordance with the employer's jurisdiction, the division said.

In addition, the division said it would not require employers to change the current work state setup for employees in their payroll systems who are telecommuting or are temporarily relocated at an out-of-state location during the COVID-19 pandemic.

--Editing by Vincent Sherry.

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