When remote work becomes available, employees can now work from any location, blurring the line of taxation based on fixed business locations. As a result, companies face multiple tax jurisdictions with which to comply. This is where the need for a CPA in Savannah GA comes in.
Here are the primary tax concerns that have emerged as a result of remote work over time:
Nexus Rules: For tax purposes, a nexus is a connection between a company and a state. Companies must observe the nexus accordingly when employees work from states other than where the business is physically located.
State and Local Tax (SALT): While the CARE Act doesn’t specifically address remote work’s impact on SALT, businesses with employees in multiple states may now have a required nexus for tax purposes.
Some of the Common Problems CPAs Face in Remote Environment
Accountants provide businesses the peace of mind that comes from knowing they are following guidelines and established practices so as not to run afoul of tax laws. But that brings with it several challenges have to face, including:
Regulation Uncertainty: Some tax laws were drafted without working from home, even from a remote perspective. This makes it difficult to determine how current tax laws are applied to remote work situations. It is the job of CPAs to interpret these laws and inform businesses on how best to follow regulations.
Multiple Jurisdictions: With businesses having employees working in other locations, CPAs now have to consider tax laws of not just several states or countries. This multiple jurisdiction further complicates the filing, for which CPAs must be aligned with the laws of multiple states.
The Risks of Permanent Establishment:
If your company has a permanent establishment in one place, it will be difficult for it to comply with the laws of multiple states since its employees work from different locations.
How CPAs Are Adapting to the New Normal
Even with the difficulties, CPAs are making strides in adjusting to this new tax world where people may be working remotely. Some of the strategies they are using include:
The Role of Technology: Given our thrust into the world of remote work, more CPAs than ever are using accounting software to analyze large data sets and prepare for scenarios in complex tax. This suite of technologies helps businesses automate workflows, minimize inaccuracies, and ensure they operate within the scope of changing tax laws.
Continuous learning: To remain current on new changes in tax laws, CPAs are setting aside time for ongoing education and professional development. In some cases, they attend webinars or read industry publications; in other cases, employees may be seeking out training programs for information to understand the tax implications of remote work.
The future of business taxation is in remote work
As remote work continues to grow, we can expect further changes in the tax system. Some new taxes might be associated with remote working in the future. They could develop brand new rules about remote work that include more definite nexus and payroll tax information, or they could develop more treaties related to taxation. Today, it is important for CPAs to update themselves and incorporate technology in the offering of advisory services to businesses.
Conclusion
Remote work is one of the new phenomena that has transformed the business process and, therefore, the taxation map. These issues include multi-state tax statutes, payroll tax issues, and possibly nexus problems, which can turn a CPA’s work into a real nightmare. Technology application enabling, updates, and integration with other teams are focusing CPAs on meeting this challenge head-on and supporting businesses in coping with the ‘new normal.’
