By Payroll and Entitlements Editorial Staff
Massachusetts adopted emergency sourcing rules for personal income tax withholding from employees who telecommute during the COVID-19, or coronavirus, pandemic. It also issued proposed rules for public comment that are identical to the emergency rules.
Nonresidents. Employers must source compensation to Massachusetts, and withhold income tax, for personal services performed by a nonresident:
- who, immediately before the Massachusetts COVID-19 emergency, was an employee engaged in performing those services in the state; and
- who is performing those services from a location outside the state due to pandemic-related circumstances.
Pandemic-related circumstances include:
- a government order issued in response to the COVID-19 pandemic;
- a remote work policy adopted by an employer to comply with federal or state government guidance or public health recommendations on the COVID-19 pandemic;
- employee compliance with quarantine or isolation directives on a diagnosis or suspected diagnosis of COVID 19 or the advice of a physician on COVID-19 exposure; or
- any other remote COVID-19 work arrangement during the period that the rules are in effect.
Residents. Massachusetts will provide a credit for income taxes paid to another state to a resident:
- who, immediately before the Massachusetts COVID-19 emergency, was an employee engaged in performing services from a location outside the state; and
- who began performing those services in Massachusetts due to pandemic-related circumstances.
It also will not require withholding from the employer if the employer must withhold income tax for the employee in the other state.
Effective date. The regulation is effective through the earlier of:
- December 31, 2020; or
- 90 days after Massachusetts Gov. Charlie Baker gives notice that the state of emergency declaration is no longer in effect.
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