By Alex Lewis

            Working remotely has become the new normal, and it may stay that way after COVID-19.[1] Although many professionals enjoy the safety, freedom, and flexibility that comes with remote work, a potential tax nightmare may be around the corner for some in 2021. If employees did not switch over their withholding once they started working remotely in a different state, those individuals could incur a higher tax bill in their resident state and possibly incur penalties.[2] Additionally, companies that now have employees working in states other than the business’s home office may unintentionally trigger income or sales tax nexus in their employees’ home states.[3] These employers may also be required to pay unemployment insurance tax in those states that employees now call home.[4] Although some state legislatures have released guidance for determining nexus and apportionment of income due to remote workers, many states have yet to address the issue.[5] Out of all the uncertainty caused by COVID-19, one thing is clear—preparing and paying income, payroll, and unemployment tax for both individuals and corporations could be complicated and expensive.

Individual Income Tax Implications 

            Typically, the state in which a taxpayer resides taxes all of their income, regardless of where it is earned.[6] Additionally, when a taxpayer works in more than one state during a year, the individual must, in most states, allocate their income to the respective state in which it was earned.[7] When this happens, the taxpayer’s resident state will give a tax credit to the taxpayer for the state income taxes paid to another state.[8]

            When employees began working remotely due to COVID-19, the taxpayer may now have less income to allocate to the state in which they normally worked (if it is located in another state).[9] Since less income will be allocated to the state in which they normally work, the amount of taxes due and the amount of credit that the taxpayer will be able to claim on their resident state income tax return will be lower.[10] The smaller credit could cause the taxpayer to have a much higher income tax liability in their resident state, which could result in tax penalties for failing to make estimated payments in their resident state.[11]

            Although some states have exempted income earned in the state because of COVID-19,[12] others have not.[13] Thus, employees should check with their employer and change their withholding requirements to their resident state to ensure that they do not incur tax penalties as a result of working remotely.[14]

Business Income/Payroll/Unemployment Tax Implications 

            Businesses that allowed their employees to work remotely due to the COVID-19 pandemic may face far more challenges. There are a variety of ways that states require businesses to apportion income.[15] Most states require businesses only to apportion income based on the sales made within the state.[16] Those states will likely be unaffected by the COVID-19 remote workforce. However, other states apportion income with a multi-factor model, which allocates income based on sales, property, and payroll.[17]

            The remote workforce will change these calculations because remote employees will change the amount of payroll allocated to each state. Some states have released guidance exempting income earned by employees in the state that were relocated due to COVID-19.[18] Under these exemptions, income earned by remote workers due to COVID-19 will not be included in the apportionment calculation.[19] Other states only allow an employer to exempt payroll from the apportionment calculation during periods when a government shelter-in-place mandate was in effect.[20] Thus, a business may need to determine the specific dates employees worked remotely and cross-check those dates with shelter-in-place mandate dates to calculate the payroll factor appropriately. In rare situations, a company may trigger nexus in a state, and an additional filing requirement, simply because they had a remote worker in the state, even though the business did not have any sales or property in the state.            

            States that do not have traditional corporate income tax regimes could cause further issues for companies. In extreme circumstances, companies may be required to register and pay certain income and other taxes.[21] For example, in Texas, a non-Texas entity does not have to pay their corporate franchise tax unless it (1) has over $500,000 of gross receipts from doing business in Texas; (2) obtains a use tax permit; or (3) has physical presence in the state.[22] Establishing physical presence includes having employees or representatives doing business in the state.[23] So, if a company normally does not have over $500,000 in gross receipts in Texas, but now has an employee working remotely in the state due to COVID-19, the entity must now pay Texas franchise tax. Washington’s business and occupation tax (“B&O”) has similar tax characteristics.[24] In Washington, a business must pay B&O tax if it (1) has physical presence nexus in Washington; (2) has more than $100,000 in combined gross receipts sourced to Washington; or (3) is organized or commercially domiciled in Washington. Thus, a remote worker could trigger nexus for a company even if they do not normally meet the $100,000 threshold.[25]

            Finally, companies that now have employees working remotely could cause the employer to pay unemployment insurance tax in the state in which the employee relocated.[26] Some states require an employer to file with the state and begin paying unemployment insurance tax once an employer has one employee working in the state.[27] In some circumstances, an employee may be exempt from triggering unemployment insurance taxes.[28]


            With so many changes happening for employers and workers, many taxpayers may not yet be worried about their next tax bill in 2021—but maybe they should be. Making sure that employers are withholding income to the correct state could alleviate future tax issues. Also, for businesses that are merely trying to stay afloat during the pandemic, the potential additional filing requirements will be an unwelcome surprise next year. Although some states have offered guidance on how to allocate payroll to the state, the nonuniformity in tax laws across states creates a hassle and could lead to a higher tax bill (or, at least, a higher tax preparation bill). States still have time to issue helpful guidance to employers regarding their payroll allocation. If corporations are lucky, some states may entirely waive the physical presence threshold that would otherwise trigger a filing requirement. Conversely, since most states are facing severe budget deficits, they may be less forgiving and will not waive any remote work performed by employees.[29] If more states follow Georgia’s guidance, employers will undoubtedly incur additional headaches trying to cross-check governmental shelter-in-place mandates with specific dates that employees worked remotely.[30] Nevertheless, with some employers now embracing remote work as a permanent solution, Americans may feel the pandemic’s tax effects for years come.[31]

[1] Why Remote Working Will Be the New Normal, Even After COVID-19, EY (Sept. 7, 2020),

[2] Katherine Loughead, In Some States, 2020 Estimated Tax Payments Are Due Before 2019 Tax Returns, Tax Found. (May 22, 2020),

[3] Daniel N. Kidney, State and Local Tax Implications of Remote Employees During the COVID-19 Pandemic, Wipfli (June 19, 2020), (stating that nexus is typically created by having “physical presence” in the state).

[4] Larry Brant, Having Employees Working Remotely May Become the New Norm—There May Be Tax and Other Traps Lurking Out There for Unwary Employers, Foster Garvey (May 26, 2020),

[5] Coronavirus Tax Relief FAQs, Ga. Dep’t of Revenue, (last visited Sept. 16, 2020).

[6] See Idaho Code § 63-3011; see also Credit for Taxes Paid to Another State, Va. Tax, (last visited Sept. 16, 2020).

[7] See Mont. Admin. R. 42.15.110(3) (requiring an employee to only allocate income that is “sourced” to the respective state); see also Or. Dep’t of Revenue, Publication OR-17 Individual Income Tax Guide 47 (2019), (requiring an employee to apportion income by taking the number of days worked in the respective state divided it by the total number of days worked everywhere in a year).

[8] Idaho Code § 63-3029(1).

[9] See Or. Dep’t of Revenue, supra note 7, at 47.

[10] Idaho Code § 63-3029(3)(a)(i).

[11] See Loughead, supra note 2 (stating that Delaware, Indiana, Montana, Nebraska, New Jersey, New York, Oklahoma, and Rhode Island require estimated state income tax payments).

[12] FAQ Articles, N.D. Tax, (last visited Sept. 16, 2020).

[13] Guidance for Individuals Temporarily Living and Working Remotely in Vermont, Vt. Dep’t of Taxes, (last visited Sept. 16, 2020).

[14] For example, assume an individual taxpayer normally lives in New York, but works in Massachusetts and has a taxable income of $100,000. In a normal year, the taxpayer will pay $5,050 (calculated using the 5.05 percent Massachusetts individual income tax rate) in tax to Massachusetts. Thus, the taxpayer will be able to claim a $5,050 credit for taxes paid to another state on their New York return, reducing the amount of taxes owed to New York. Now, assume that because of a stay-at-home order, the taxpayer works at home for 75 percent of the year, and only 25 percent of its income will be allocated to Massachusetts. Then, the taxpayer will only receive a $1,262.5 credit on their New York tax return, causing the taxpayer to underpay their taxes substantially unless a withholding change is made. If no change is made, the taxpayer may incur penalties. See 2019 Personal Income Tax Rates, Mass. Dep’t of Revenue, (last visited Sept. 16, 2020) (providing Massachusetts state income tax rates); Who Must Make Estimated Tax Payments?, N.Y. State Dep’t of Tax’n & Fin. (Aug. 5, 2020),

[15] State Apportionment of Corporate Income, Fed’n of Tax Adm’rs (Feb. 2020),

[16] Id.

[17] Id.

[18] See Frequently Asked Questions About the Income Tax Changes Due to the COVID-19 National Emergency, Neb. Dep’t of Revenue, (last visited Sept. 16, 2020).

[19] See id.

[20] See Coronavirus, supra note 5.

[21] Texas: Franchise Tax, Economic Nexus Rule is Finalized, KPMG (Dec. 20, 2019),

[22] 34 Tex. Admin. Code § 3.586(f).

[23] Id. § 3.586(d)(5).

[24] Out of State Business Reporting Thresholds and Nexus, Wash. State Dep’t of Revenue (Apr. 2020),,sourced%20or%20attributed%20to%20Washington (last visited Sept. 16, 2020).

[25] Wash. Admin. Code § 458-20-193(102)(a)(ii) (stating that even the “slightest presence” of a single employee may trigger the physical presence nexus).

[26] Stephen Miller, Out-of-State Remote Work Creates Tax Headaches for Employers, SHRM (June 16, 2020),

[27] Out-of-State Employers with Employees Living in Idaho, Idaho State & Fed. Res. for Bus. (July 30, 2020),

[28] Occupations Exempted from Unemployment Insurance Coverage, Wash. State Emp. Sec. Dep’t (last visited Sept. 16, 2020).

[29] States Grappling with Hit to Tax Collections, Ctr. on Budget and Pol’y Priorities (Aug. 24, 2020),

[30] See Coronavirus, supra note 5.

[31] Why Remote, supra note 1.

By Alexandria Montgomery

As the COVID-19[1] pandemic continues to spread across the United States, a new wave of abortion litigation has reached federal courts. In the wake of the ongoing pandemic, several states—including Texas, Ohio, Iowa, Alabama, and Oklahoma—have attempted to restrict women’s access to abortion procedures under the guise of promoting social distancing and conserving healthcare resources.[2] These temporary abortion bans have most commonly come in the form of an executive order from a state’s governor regarding limitations on non-essential medical procedures.[3] This raises several legal questions. May abortion be considered a “nonessential” medical procedure? Moreover, are these abortion bans constitutional given that they are supposedly only temporary? And finally, does the public interest in stopping the spread of COVID-19 and conserving much-needed personal protective gear (“PPG”) for healthcare professionals outweigh a woman’s constitutional privacy interest in obtaining an abortion?

On Monday, March 30, a federal judge halted a temporary abortion ban in Texas.[4] Texas Governor Greg Abbott had issued an executive order (“Executive Order GA-09”) on March 22 that required all health care professionals and facilities to postpone  “all surgeries and procedures that are not immediately medically necessary to correct a serious medical condition of, or to preserve the life of, a patient who without immediate performance of the surgery or procedure would be at risk for serious adverse medical consequences or death . . . .”[5]

The next day, the Attorney General of Texas, Ken Paxton, issued a press release clarifying that the that the Executive Order GA-09 prohibited “any type of abortion that is not medically necessary to preserve the life or the health of the mother.”[6] Of note, the Attorney General’s interpretation, which explicitly prohibited “any type” of abortion, would not only ban surgical abortions, but medication abortions as well—despite the fact that medication abortions do not require any type of surgery or procedure. The Attorney General’s interpretation also made clear that those who did not comply with Executive Order GA-09 could face criminal “penalties of up to $1,000 or 180 days of jail time.”[7]

Several abortion providers (collectively, “Planned Parenthood”) quickly filed a constitutional challenge against the Governor and state officials seeking a temporary restraining order against both the Texas Attorney General’s interpretation of Executive Order GA 09 and the Order itself.  In granting the temporary restraining order, which prohibits Texas from enforcing Executive Order GA-09 as applied to any type of abortion, the court made several determinations.

First, the court stated in no uncertain terms that, “[r]egarding a woman’s right to a pre-fetal-viability abortion, the Supreme Court has spoken clearly. There can be no outright ban on such procedure.” Indeed, for nearly half a century, the Supreme Court has repeatedly and emphatically held that the Due Process Clause of the Fourteenth Amendment includes a right of privacy that protects a woman’s right to make the ultimate decision to terminate a pregnancy at any point prior to viability.[8] Before the point of viability, “a state has no interest sufficient to justify an outright ban on abortion.”[9] In other words, although states may regulate pre-viability abortions, they may not outright ban them.[10]

The court, however, also addressed several factors that are specific to this unprecedented situation caused by the COVID-19 pandemic. Although Texas and some other states have attempted to classify “any type” of abortion as nonessential, abortion is a time-sensitive procedure.[11] Many states such as Texas have placed gestational limits on when a woman may legally obtain an abortion.[12] Because of these limits, even a temporary ban on abortion would allow some women’s pregnancies to progress to a point at which it would no longer be legal to obtain an abortion, effectively stripping some patients of their constitutional right to choose to terminate a pregnancy.[13]

Moreover, it has always been and will continue to be the case that restricted access to abortion services disproportionately impacts low-income women. Long before the COVID-19 pandemic, some of the most common reasons that abortion patients provided for choosing to terminate a pregnancy included the inability to afford raising a child and the belief that continuing the pregnancy would interfere with their ability to work.[14]  And now, in the midst of a pandemic that has already wreaked havoc on the United States economy, the risks of requiring someone to continue an unwanted pregnancy are perhaps even greater.[15] In only a two week time-span, unemployment insurance claims in the United States have increased a shocking 1500%.[16] Labor economists estimate that potentially 14 million workers will lose their jobs due to the pandemic by the summer.[17] In the face of such severe economic distress, it is vital now more than ever that women are able to make deeply personal decisions relating to whether they are in a position to bring a dependent child into the world.

Finally, the court noted that because of the pandemic, travelling to other states to obtain an abortion is increasingly risky.[18] The Centers for Disease Control and Prevention has warned that travelling, even within the United States, may increase the possibility of contracting COVID-19.[19]  Accordingly, the court determined that allowing medical providers to resume abortion services would not disserve the public interest.[20] Any benefits of conserving a limited amount of PPG for healthcare providers is outweighed by the harm of allowing a state to ban abortions outright.[21] A woman’s constitutional right must take precedence, especially when paired with the unfortunate current economic circumstances and the increased health risks that travelling to other states to obtain an abortion would pose. In short, a woman’s constitutional right to obtain an abortion continues to survive, even in the midst of an unprecedented pandemic.

[1] COVID-19 is the name of the disease caused by the novel coronavirus (SARS-CoV-2). See Naming the Coronavirus Disease (COVID-19) and the Virus That Causes It, World Health Org., (last visited Apr. 1, 2020).

[2] See Kate Smith, Abortion in Texas will resume, despite attorney general orders, CBS News (Mar. 30, 2020, 06:47 PM),

[3] See, e.g., Tex. Exec. Order No. GA-09 (Mar. 22, 2020), (prohibiting nonessential surgeries and medical procedures in Texas).

[4] See Smith, supra note 2. In recent days, federal judges have also enjoined similar COVID-19-related abortion bans in both Ohio and Alabama. See Ema O’Connor, Judges Struck Down Three State Bans On Abortions During The Coronavirus Outbreak (Mar. 31, 2010, 10:53),

[5] See Tex. Exec. Order No. GA-09, supra note 3.

[6] See Press Release, Ken Paxton, Attorney Gen. of Tex., Health Care Professionals and Facilities, Including Abortion Providers, Must Immediately Stop All Medically Unnecessary Surgeries and Procedures to Preserve Resources to Fight COVID-19 Pandemic (Mar. 23, 2020),

[7] See id.

[8] See Planned Parenthood of Se. Pa. v. Casey, 505 U.S. 833, 879 (declaring that a state’s regulation is an unconstitutional “undue burden” if the regulation’s “purpose or effect is to place a substantial obstacle in the path of a woman seeking an abortion before the fetus attains viability.”); Roe v. Wade, 410 U.S. 113, 170 (1973); see also Whole Woman’s Health v. Hellerstedt, 136 S. Ct. 2292, 2300 (2016) (reaffirming the central holdings of Roe and Casey that prior to the point of viability, the state may not unduly burden a woman’s constitutional right to obtain an abortion).

[9] Planned Parenthood Ctr. for Choice v. Abbott, No. A-20-CV-323-LY, slip op. at 6 (W.D. Tex. filed Mar. 30, 2020) (citing Roe, 410 U.S. at 163–64)

[10] See id.  

[11] See Abortion & COVID-19, Nat’l Abortion Federation, (last visited Mar. 30, 2020).

[12] See Abbott, slip op. at 7 (citing Tex. Health & Safety Code Ann. § 171.044 (West 2017)) (explaining that Texas bans abortions after 20 weeks post-fertilization).

[13] See id.

[14] See Rachel K. Jones et al., Guttmacher Inst., Characteristics of U.S. Abortion Patients, 2008, at 7, 9 (2010) (“Poor women were overrepresented among abortion patients.”).

[15] See Abbott, slip op. at 8.

[16] See Heidi Shierholz, Unemployment Insurance Claims Jumped Nearly 1,500% in Two Weeks, Econ. Policy Inst. (Mar. 26, 2020), (stating that there were 3.3 million unemployment insurance claims in the week before March 26).

[17] See id.

[18] See Abbott, slip. op. at 8.

[19] See Coronavirus and Travel in the United States, Ctrs. for Disease Control & Prevention, (last updated Mar. 30, 2020). Although the CDC does not typically issue domestic travel restrictions or advisories, it has now issued a travel advisory urging the residents of New York, New Jersey, and Connecticut “to refrain from non-essential domestic travel for 14 days” due to the severity of the COVID-19 outbreak in these states. See id.

[20] See Abbott, slip. op. at 8.

[21] See id.