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April 8, 2020
2020-0912

Indiana will not assert nexus for employees temporarily working from home in the state due to COVID-19

The Indiana Department of Revenue announced that under certain circumstances in connection with COVID-19, it will not assert nexus or that the protections of the federal Interstate Income Act of 1959 (P.L. 86-272) have been exceeded due to a temporary remote work assignment within the state.

This relief applies only for the period that:

  • There is an official work-from-home order issued by an applicable federal, state or local government unit
  • There is an order of a physician in connection with the COVID-19 outbreak or an actual diagnosis of COVID-19, plus 14 days to allow for return to normal work locations

The Department cautions that if the employee remains in Indiana after the temporary remote work requirement has ended, nexus may be established for that employer.

Ernst & Young LLP insights

This guidance does not change the requirement that employers with business operations in Indiana (other than employees temporarily working from home under the limitations set forth by the Department) withhold Indiana state income tax on the wages of resident employees, regardless of where those wages were earned.

This announcement does, however, bring much needed relief to Indiana employers that otherwise could have been forced to incur other business taxes (e.g., sales & use, unemployment insurance) merely because employees are temporarily working from home within Indiana 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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