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May 14, 2020
2020-1296

Alabama provides guidance on income tax withholding and assertion of nexus for employees working temporarily in the state due to COVID-19

In its Operational Updates Due to COVID-19, the Alabama Department of Revenue provided guidance concerning the tax implications of employees temporarily working from home within the state during the period of the pandemic emergency.

Nexus

Alabama will not consider temporary changes in an employee's physical work location during periods in which temporary telework requirements are in place due to the COVID-19 pandemic to impose nexus or alter apportionment of income for any business.

Income tax withholding

The wages of Alabama residents are subject to income tax regardless of where they are earned, and income tax withholding applies if the employer has established nexus in Alabama.

During the period of the COVID-19 emergency, Alabama will not impose nonresident income tax or income tax withholding on the wages earned by teleworkers working temporarily within the state if the telework is necessitated by the pandemic and related federal or state measures to control its spread.

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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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