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March 31, 2020
2020-0797

New Jersey will not treat temporary work from home due to COVID-19 as enough to trigger nexus

The New Jersey Division of Taxation announced on March 30, 2020 that during the period of the COVID-19 national emergency it will temporarily waive the impact of the legal threshold within N.J.S.A. 54:10A-2 and N.J.A.C. 18:7-1.9(a) that treats employee work from within New Jersey as sufficient nexus for out-of-state corporations.

The announcement states that for employees working from home solely as a result of closures due COVID-19 and/or the employer's social distancing policy, no threshold will be considered to have been met.

New Jersey does require that income tax be withheld from wages paid to all New Jersey residents, regardless of where they work, if the employer has business operations (nexus) within the state. Pursuant to the Division's announcement, the state will not assert nexus merely because an employee is temporarily on a telework assignment within the state due to COVID-19.

The announcement brings much-needed relief to New Jersey employers that could have been forced to incur other business taxes (e.g., sales and use, unemployment insurance) merely because employees are temporarily working from home within New Jersey due to the COVID-19 emergency.

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Contact Information
For additional information concerning this Alert, please contact:
 
Workforce Tax Services - Employment Tax Advisory Services
   • Kenneth Hausser (kenneth.hausser@ey.com)
   • Debera Salam (debera.salam@ey.com)
   • Kristie Lowery (kristie.lowery@ey.com)
   • Peter Berard (peter.berard@ey.com)

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