Does Registering For Employee Withholding Create Nexus

July 17, 2020
2020-1826

Kentucky issues guidance apropos income tax withholding and nexus for employees temporarily working in Kentucky due to COVID-19

The Kentucky Department of Revenue has published frequently asked questions (FAQs) apropos the income taxation withholding requirements and the assertion of nexus for employees temporarily working in the country due to the COVID-19 emergency.

The guidance is express to land personal income and state business organisation taxes, because the Department does non administer license, occupational or other excise taxes imposed by local Kentucky taxing jurisdictions.

Income taxation withholding

The requirements for Kentucky income tax withholding remain unchanged by restrictions related to the COVID-19 emergency.

Regulation 103 KAR xviii:010 requires that every employer incorporated in Kentucky, qualified to practice business in Kentucky, doing business in Kentucky, or subject to the jurisdiction of Kentucky in any way is subject field to the state's income taxation withholding and reporting requirements.

Wages paid to a Kentucky resident are subject to income tax and income tax withholding on wages paid for services provided both inside and outside of the land.

Wages paid to a Kentucky nonresident are field of study to income tax and income tax withholding for services provided within the state with the exception of employees who are residents of those states with which Kentucky has a reciprocal understanding and that have completed and submitted to the employer Form 42A804, Kentucky'south Withholding Certificate. Form 42A804 must exist retained in the employer'southward files. (Withholding Kentucky income tax: Instructions for employers, rev. February 2019, pg. 1)

Kentucky has reciprocal understandingsouth with Illinois, Indiana, Michigan, Ohio, Virginia, West Virginia and Wisconsin. For Virginia, the employee must commute daily for the reciprocal agreement to use and, for Ohio, the employee cannot exist a shareholder employee with 20% or greater direct or indirect equity investment in an S corporation.

Assertion of nexus

The Department will proceed reviewing state income tax nexus determinations on a case-by-instance basis.

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Does Registering For Employee Withholding Create Nexus,

Source: https://taxnews.ey.com/news/2020-1826-kentucky-issues-guidance-concerning-income-tax-withholding-and-nexus-for-employees-temporarily-working-in-kentucky-due-to-covid-19

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