Remote work


Navigating remote work compliance

With remote employees, taxes and compliance become complex

Remote work has become the norm during the COVID-19 global pandemic. But demand for it was around long before the pandemic began, and it will likely persist long after the pandemic ends. As companies seek to accommodate a spectrum of workplace arrangements, tax implications are getting more complex, and remote work compliance is becoming more important.

Waking up to a new reality

The need for remote work arrived quickly when COVID-19 caused the implementation of work-from-home orders virtually overnight. That need likely won’t go away quickly. For many companies, it might not go away at all.

The demand for remote work options existed before the pandemic. Technology was already making virtual connections more seamless, and hiring managers were benefiting from the reduced importance of geography in talent acquisition. That demand will likely continue to grow after the pandemic, when business travelers resume their cross-country routines and companies discover that some former in-office employees have been just as productive during this at-home stretch as they were prepandemic.

Remote workforces built to last beyond COVID-19, though, may carry with them major tax implications.

Remote employee taxes: Get to know your workforce

As leaders prepare for a future that features remote work more prominently, they need to understand three key types of employees (in-office, remote, and hybrid) and the nuanced tax implications each brings. Once they understand these different groups, leaders can take action to develop a remote work compliance policy that fits their needs and capabilities from a tax perspective.

Start taking action today

Tax can play a critical role in shaping the future of remote work at an organization. For those organizations starting out on the remote work compliance journey, there are six steps to get you on your way.

  • Connect with your stakeholders. Tax should not be an island in this process. Plug into the wider strategy.
  • Gather data. Understand where your employees are, have been, and plan to be if you implement remote working.
  • Analyze the likely compliance, operational, and cost change that will be brought about by remote working.
  • Identify your red lines. Will you allow employees to work anywhere or will there be nonnegotiable locations?
  • Develop your tax policy, and implement it into the broader remote work strategy.
  • Develop your compliance response. Will you have more work to do? How will you do it? Do you have the resources necessary for the activities required?

Once an organization has gathered the right data and answered the necessary questions, an effective remote work compliance structure should include three critical prongs:

  • Governance: Handle escalations, continually assess your tax system’s effectiveness, and manage your long-term remote work policy.
  • Case management: Track, evaluate, and make decisions on remote work initiations, change requests and extensions.
  • Compliance operations: Monitor where new filing, withholding, and income allocations are needed; complete payroll tax registrations for remote employees; and complete year-end filings for employer and employees.

Paying the bills

Expenses are an important consideration for remote and hybrid employees. It is important to what expenses employers are reimbursing and determine if they are allowable business expenses or relate to commuting, which would likely be compensatory.

Remote work compliance: A need that’s not going away

The demand for remote work options did not start with COVID-19, but it certainly grew as a result of it. Working from home has become the (new) norm. Long after the pandemic ends, there will be former in-office employees who will want to keep that status quo—at least to some extent. With the potential long-term savings in overhead costs, their companies may be just as enthusiastic.

But remote work compliance requires more than videoconferencing apps. It requires a complete understanding of your workforce today and a thorough mapping of where and how you expect it to grow tomorrow. Doing so will allow you to properly track and meet your compliance obligations for employees, wherever they fall on the remote work spectrum.

When it comes to growing your organization’s remote workforce, tax needs a seat at the table. Are you ready to take it?

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