Did an employee temporarily working remotely in South Carolina because of COVID-19 create nexus or change withholding for the employer, and how long did the relief last?

Plain-English summary

During the COVID-19 pandemic, South Carolina said it would not treat a business as having South Carolina nexus just because an employee was temporarily working from a different location because of COVID-19 — and it left the employer's income tax withholding for those employees unchanged. SC Information Letter #21-8 extends that temporary relief through September 30, 2021.

The relief was first announced in SC Information Letter #20-11 (May 15, 2020), which addressed two things for employees temporarily working in a different work location due to COVID-19: (1) a business would not establish nexus for income and sales tax solely because of that temporary work location, and (2) how the employer's withholding requirements applied to those employees.

This letter is purely an extension. The end date has moved several times:

• #20-11 — relief from March 13, 2020 through September 30, 2020;
• #20-24 — extended to December 31, 2020;
• #20-29 — extended to June 30, 2021;
• #21-8 (this letter) — extended to September 30, 2021.

For the actual terms and conditions of the relief, the Department directs readers to the full text of SC Information Letter #20-11 on its Law and Policy page.

What this means for you

If you were an employer with employees temporarily working in (or out of) South Carolina during the pandemic, this relief meant those temporary arrangements, by themselves, would not create a new South Carolina income or sales tax filing obligation, and your withholding did not change on account of the temporary location — but only through September 30, 2021. Because the relief has ended and the details live in SC Information Letter #20-11, rely on that letter for the specific conditions and confirm current nexus and withholding rules for any period after September 30, 2021.

Common questions

Q: Did a temporarily remote employee create South Carolina nexus for my business during COVID-19?
A: No — under this relief, a business did not establish South Carolina income or sales tax nexus solely because an employee was temporarily working from a different location due to COVID-19.

Q: How long did the relief last?
A: From March 13, 2020 through September 30, 2021, after several extensions (SC Information Letters #20-11, #20-24, #20-29, and this #21-8).

Q: Where are the detailed terms of the relief?
A: In SC Information Letter #20-11, which this letter extends; #21-8 only moves the end date.

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/IL21-8.pdf

Original ruling text

STATE OF SOUTH CAROLINA

DEPARTMENT OF REVENUE
300A Outlet Pointe Blvd., Columbia, South Carolina 29210
P.O. Box 125, Columbia, South Carolina 29214-0575

SC INFORMATION LETTER #21-8
SUBJECT:

Extended Tax Relief – Nexus and Income Tax Withholding Requirements
for Employers with Workers Temporarily Working Remotely as a Result of
COVID-19
(Income Tax and Sales Tax)

DATE:

April 7, 2021; Effective from March 13, 2020 – September 30, 2021

MODIFIES:

SC Information Letter #20-29

AUTHORITY:

S.C. Code Ann. Section 12-4-320 (2014)
S.C. Code Ann. Section 1-23-10(4) (2005)
SC Revenue Procedure #09-3

SCOPE:

An Information Letter is a written statement issued to the public to
announce general information useful in complying with the laws
administered by the Department. An Information Letter has no
precedential value.

On May 15, 2020 the Department issued SC Information Letter #20-11 to announce
temporary relief regarding a business’s establishment of nexus (income and sales) solely
because an employee is temporarily working in a different work location due to COVID-19
and provided guidance with respect to employer withholding requirements for these
employees. The relief was effective from March 13, 2020 through September 30, 2020. SC
Information Letter #20-24 extended the relief until December 31, 2020 and SC Information
Letter #20-29 further extended the relief until June 30, 2021.
The Department is announcing that the relief set forth in SC Information Letter #20-11 will
be extended through September 30, 2021.
The full text to SC Information Letter #20-11 and the relief provided can be found on the
Department’s Law and Policy page at dor.sc.gov/policy.

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