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June 3, 2021
2021-1103

Kansas law temporarily modifies state income tax withholding rules for teleworkers due to the COVID-19 emergency

On May 17, 2021, Kansas Governor Laura Kelly signed into law the Kansas Taxpayer Protection Act (SB 47) which, among other things, provides that for the period January 1, 2021, through December 31, 2022, for wages paid to employees temporarily teleworking in a state other than their primary work location, employers have the option to withhold income taxes based on the state of each employee's primary work location instead of the state in which the employee is teleworking.

The law also states that if any provisions of K.S.A. 79-3296 (and amendments), are in conflict, this provision shall control.

Background

On January 27, 2021, Kansas Governor Laura Kelly announced that in consideration of the COVID-19 emergency, Executive Order 21-01 was issued providing that for the period March 13, 2020 through December 31, 2020, employers had the option to withhold Kansas state income tax based on the state of the employee's primary work location rather than the state in which the employee was temporarily teleworking due to COVID-19. (See EY Tax Alert 2021-0246.)

Executive Order 21-01 stated that effective on and after January 1, 2021, employers were required to withhold Kansas state income tax from all wages paid to residents and from wages paid to nonresidents working within the state according to the requirements in K.S.A. 79-3296. SB 47 delays the effective date of the withholding requirement to January 1, 2023. (See also KW-110.)

In December 2020, the Kansas Department of Revenue stated in its frequently asked questions (FAQs) about income tax withholding that, in consideration of the impact of the COVID-19 emergency on employer operations, it would waive employer underwithholding and individual estimated tax payment penalties for all employees required to work remotely. These penalty waivers applied for the period in 2020 that Governor Laura Kelly's disaster emergency order remained in effect. (See EY Tax Alert 2020-2827.)

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

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