Connecticut remote worker tax break for 2020 is now law
July 09, 2021
Shipman & Goodwin LLP
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On March 4, 2021, Governor Lamont signed HB 6516, a law to mitigate adverse tax consequences for employees who work remotely during COVID-19, and regarding the waiver of liens on the property of beneficiaries and a three-year grant in lieu of Tax program.
This new law allows Connecticut residents to credit income taxes paid to another state that has either an employer’s convenience rule (like New York) or a COVID-19 pandemic-like convenience rule (like Massachusetts). In terms of the convenience of the employer rule, the new law provides credit even if the employee was forced to work remotely from Connecticut. With regard to the pandemic-like convenience regulation, the new law requires that, in order to take advantage of the loan, the employee must prove that he or she was working normally immediately before March 11, 2020.
Essential: the new law only applies to the 2020 tax year. The new legislation has no impact on the handling of these issues in tax year 2021 or beyond. As a result, Connecticut residents must be aware of the ongoing tax implications of working from home beyond the 2020 tax year.
In addition, the new law provides some relief to employers by providing that the Treasury Department (the “Department”) does not take into account the activities of an employee who worked remotely from Connecticut during tax year 2020 due to the pandemic alone. in determining whether such an employer has a connection with Connecticut for all Department-administered taxes, including withholding taxes, sales taxes, corporation taxes, and transit taxes for the 2020 tax year. As with the tax break, the Nexus Exemption provisions apply only to 2020 , so employers need to be careful about whether their employees’ activities in Connecticut in 2021 could create a nexus to Connecticut in 2021.
On March 5, 2021, the Commissioner of the Department of Revenue Services issued a bulletin that can be found Here this further explains the provisions of the new legislation. The bulletin indicates that the DRS has set up the following dedicated hotline to receive and answer questions about the new legislation: 860-297-5677.
Originally published March 8, 2021
The content of this article is intended to provide general guidance on the subject. Expert advice should be sought regarding your specific circumstances.
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