3 minute read 18 Sep 2020
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COVID-19: state guide to payroll and employment tax provisions

By

Debera Salam

EY Employment Tax Advisory Services Associate Director

Thought leader. Committed to empowering the payroll community with learning tools. Author. Passionate about combining the creative, innovative and technical.

3 minute read 18 Sep 2020
Related topics COVID-19 Tax

In this publication, we provide an update of the many state and local payroll responses to COVID-19.

To contain the outbreak of COVID-19 in the US, numerous states and local governments temporarily closed nonessential businesses and issued “stay-at-home” orders, creating a historic disruption to the US workforce.

Some states and localities have responded to the emergency by expanding their paid leave mandates; waiving certain reporting requirements; providing extensions on the due date of payroll tax returns, tax payments or both; and/or temporarily halting garnishment orders.

Federal legislation under the Families First Coronavirus Response Act (FFCRA) and the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act) expanded unemployment insurance (UI) benefits in connection with COVID-19, temporarily altering the benefit eligibility requirements and extending coverage to individuals who would not normally qualify. The legislation generally relieves employers from the direct charging of these COVID-19 UI benefits to their UI accounts. These federal provisions are not automatic. Instead, states must enter into agreements with the U.S. Department of Labor to receive federal offset funds. The result is that the states are not uniform in the timing or application of the COVID-19 provisions and employers and employees are challenged to understand the rules that apply.

COVID-19 has also dramatically increased the number of employees working from home, an arrangement that is new for many employers. Telecommuting raises numerous questions about income tax withholding and the assertion of nexus for other business taxes (e.g., sales and use tax, corporate income tax).

In this publication, we provide an update of the many state and local payroll responses to COVID-19. This is not an exhaustive compilation, as the governmental response has been far-reaching. Further, the situation continues to evolve.

This publication is current as of September 18, 2020, unless otherwise indicated.

For updates to this COVID-19 state guide or to obtain our COVID-19 state trackers, contact Debera Salam or Kenneth Hausser.

Summary

Federal, state and local governments are responding quickly to craft legislation, regulations and policies to address the unique workforce challenges created by the global COVID-19 crisis. The resulting framework is complex and confusing, and in many cases, guidance is still forthcoming.

Employers will be challenged in the months ahead to comply with the requirements governing employee protections while at the same time properly taking advantage of COVID-19 relief measures that can bring them administrative and financial relief.

About this article

By

Debera Salam

EY Employment Tax Advisory Services Associate Director

Thought leader. Committed to empowering the payroll community with learning tools. Author. Passionate about combining the creative, innovative and technical.

Related topics COVID-19 Tax