Due to unprecedented temporary closings of offices and businesses and stay-at-home orders issued across the United States during the Coronavirus (COVID-19) pandemic, many businesses have implemented temporary work at home options for employees. As a result, the South Carolina Department of Revenue (SCDOR) announced temporary relief regarding a business’s establishment of South Carolina state tax nexus solely because an employee is temporarily working in a different work location due to COVID-19, and also provided guidance with respect to employer withholding requirements for these employees. SCDOR has extended this temporary relief to September 30, 2021.
SCDOR announced it will not use changes solely in an employee’s temporary work location due to the remote work requirements arising from, or during, the COVID-19 relief period (March 13, 2020 – September 30, 2020) as a basis for establishing South Carolina tax nexus or altering apportionment of income.
During the COVID-19 relief period, a South Carolina business’s withholding requirements are not affected by the current shift of employees working on the employer’s premises in South Carolina to teleworking from outside of South Carolina. Wages of nonresident employees temporarily working remotely in another state instead of their South Carolina business location remain subject to South Carolina withholding. During the COVID-19 relief period, an out-of-state business is not subject to South Carolina’s withholding requirement solely due to the shift of employees working on the employer’s premises outside of South Carolina to teleworking from South Carolina. Wages of a South Carolina resident employee temporarily working remotely from South Carolina instead of their normal out-of-state business location are not subject to South Carolina withholding if the employer is withholding income taxes on behalf of the other state. The relief announced by SCDOR does not apply to workers whose status changes from temporary to permanent status during this period.
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