December 15, 2020
Wilmington, Delaware issues guidance concerning its earnings and head tax requirements for teleworkers in light of COVID-19
In the wake of the COVID-19 emergency, the City of Wilmington updated the interpretation of its earned income and head tax regulations for teleworkers following a comment and review period that spanned from June 10, 2020 to October 13, 2020.
The revised guidance summarized below is retroactive to January 1, 2020 and will remain in effect until changed through the regulatory process.
Nonresident employees who work for businesses based in Wilmington are responsible for paying earned income tax based on the portion of work performed and services rendered within the city limits of Wilmington. The City now interprets "work performed" as work done within Wilmington's physical limits, and "services rendered" as work performed on behalf of a business based in Wilmington.
Accordingly, employees with an official work location within the Wilmington city limits are subject to the earnings tax unless the employer certifies that an employee did not provide or render services at the employer's location within the Wilmington city limits under the period of the Delaware COVID-19 emergency order.
Once Delaware's COVID-19 emergency order is lifted, employees continuing to work from home for an employer based within the Wilmington city limits are subject to the earnings tax unless the employer certifies that the employee has permanently ceased providing or rendering services to the employer's location within the Wilmington city limits.
Employers domiciled within the Wilmington city limits, and to which the employee's work location is documented at the same location, are required to pay head tax on employees of five or more. Head tax filings may be subject to review by the City to determine if the employee record of work location is within the Wilmington city limits.
All refunds and certifications are subject to approval by the Director of Finance for the City of Wilmington. All appropriate documentation must be filed before approvals are finalized.
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