Tax Implications Triggered by the COVID-19 Remote Work Transition

The tax and regulatory issues surrounding worker classification of individuals who work and live in different states has been around for decades. The COVID-19 pandemic and its ensuing stay-at-home orders brought an almost overnight shift to remote work for most of the U.S. economy. While the test has shown that large sections of the economy can function just fine with people working remotely, the overnight transition prevented taxpayers from having time to thoughtfully consider all the impacts of this significant change, including income tax withholding and employer liability issues.

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Practical Guidance Updates

Featuring the latest updates from your Practical Guidance account.  

• Tax Key Legal Developments Tracker (Federal)
  Stay informed on new developments.
  • Practice and Procedure: IRS issues final regulations relating to the new mandatory 60-day postponement of certain time-sensitive tax-related deadlines by reason of a federally declared disaster. The final regulations clarify the definition of “federally declared disaster.” T.D. 9950, 86 F.R. 31146-31151.
  • Business Entities: IRS releases guidance allowing an eligible partnership to file an amended Form 1065, U.S. Return of Partnership Income, and furnish a corresponding Schedule K-1 (Form 1065), Partner’s Share of Income, Deductions, Credits, etc., to each of its partners as an alternative option to filing an administrative adjustment request. Rev. Proc. 2021-29.
  • Excise Taxes/Credits: IRS announces in an Exempt Organizations Update that the mandatory electronic filing of 2020 Form 4720, “Return of Certain Excise Taxes Under Chapters 41 and 42 of the Internal Revenue Code,” for private foundations begins June 16, 2021. Update on Mandatory Electronic Filing for Form 4720 by Private Foundations.
  • Real Estate: IRS explains how a taxpayer changes its method of computing depreciation to comply with the 2020 change in law to retroactively provide a 30-year recovery period under the alternative depreciation system in IRC Section 168(g) for certain residential rental property placed in service before 2018 and held by an electing real property trade or business. Proc. 2021-28.

• Document alerts allow you to stay current on legal developments that affect your practice. Find out how to set up your document alerts.
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