Did a temporary COVID-19 remote-work location change create South Carolina nexus, alter income apportionment, or change employer withholding from March 13 through September 30, 2020?

Plain-English summary

South Carolina temporarily ignored an employee's COVID-19-driven change in work location when deciding whether the employer had a new withholding duty, established nexus, or had to alter income apportionment.

The relief ran from March 13 through September 30, 2020. It applied only while the employee's work-location change was temporary; it did not apply if the employee's status became permanent during the period.

South Carolina employer; employee temporarily outside the state

A South Carolina business did not change its withholding treatment merely because employees who normally worked at its South Carolina premises temporarily teleworked from another state. Wages of nonresident employees temporarily working elsewhere remained subject to South Carolina withholding under the relief.

Out-of-state employer; employee temporarily inside South Carolina

An out-of-state business did not acquire a South Carolina withholding duty solely because an employee who normally worked outside South Carolina temporarily teleworked from South Carolina.

For a South Carolina resident employee, the wages remained outside South Carolina withholding when they were subject to the withholding law of the normal work state and the employer continued withholding for that other state.

Nexus and apportionment

The Department would not use changes solely in an employee's temporary COVID-related work location as a basis to establish nexus—including for Public Law 86-272 purposes—or to alter income apportionment during the relief period.

What this means for you

Employers with pandemic-era remote workers

The relief preserved the pre-pandemic withholding and nexus treatment while a location change was temporary. It did not permanently rewrite sourcing or nexus rules.

Employees whose work arrangement became permanent

The temporary relief no longer applied once the worker's status changed from temporary to permanent, even if that happened before September 30, 2020.

Accountants and tax professionals

Use the exact relief dates and confirm whether the employer continued withholding for the normal work state. For later periods, check the subsequent extensions and current law.

Common questions

Q: Did temporary telework from South Carolina automatically create a new withholding duty for an out-of-state employer?
A: No, not solely because of the temporary COVID-related shift and assuming the other-state withholding condition was met.

Q: Did a South Carolina employer stop withholding when a nonresident employee temporarily worked from another state?
A: No. The letter kept South Carolina withholding in place for that temporary arrangement.

Q: Could the temporary location establish nexus or change apportionment?
A: The Department said it would not use that location change alone for either purpose during the relief period.

Q: Did the relief cover a permanent remote-work change?
A: No.

Citations and references

• S.C. Code Ann. § 12-8-520 — withholding rule discussed in the letter
• S.C. Code Ann. §§ 12-4-320 and 1-23-10(4) — Information Letter authority
• Public Law 86-272 — expressly included in the nexus footnote
• SC Revenue Procedure #09-3

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/IL20-11.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 #20-11

SUBJECT:

Nexus and Income Tax Withholding Requirements for Employers with
Workers Temporarily Working Remotely as a Result of COVID-19

DATE:

May 15, 2020; Effective from March 13, 2020 – September 30, 2020

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.

Purpose
Due to unprecedented temporary closings of offices and businesses and stay at home orders
issued across the United States during the Coronavirus (COVID-19) pandemic, many businesses
have implemented temporary work at home options for employees. The Department is
announcing temporary relief regarding a business’s establishment of nexus solely because an
employee is temporarily working in a different work location due to COVID-19 and is providing
guidance with respect to employer withholding requirements for these employees.

South Carolina Withholding Requirements – General Rule under Code Section 12-8-520
South Carolina law requires businesses located in South Carolina to withhold income tax on the
wages of residents and nonresidents who are working in South Carolina. Wages of South
Carolina residents who are working in a state other than South Carolina are not subject to South
Carolina withholding if the wages are subject to the withholding laws of the state in which they
are earned and the employer is withholding income taxes on behalf of the other state.

1

South Carolina Withholding Requirements - Tax Relief Period
Effective from March 13, 2020 through September 30, 2020, South Carolina will not use the
temporary change of an employee’s work location during the COVID-19 relief period to impose
a South Carolina withholding requirement under Code Section 12-8-520, as explained below.
This relief does not apply to workers whose status changes from temporary to permanent status
during this period.

SC Business with Employees Temporarily Changing Work Location to Outside South Carolina
South Carolina law requires businesses located in South Carolina to withhold income tax on the
wages of residents and nonresidents who are working in South Carolina. During the COVID-19
relief period, a South Carolina business’s withholding requirements are not affected by the
current shift of employees working on the employer’s premises in South Carolina to teleworking
from outside of South Carolina. Accordingly, the wages of nonresident employees temporarily
working remotely in another state instead of their South Carolina business location are still
subject to South Carolina withholding.
Out-of-State Business with Employees Temporarily Changing Work Location to South Carolina
South Carolina law provides that wages of South Carolina residents who are working in a state
other than South Carolina are not subject to South Carolina withholding if the wages are subject
to the withholding laws of the state in which they are earned and the employer is withholding
income taxes on behalf of the other state. During the COVID-19 relief period, an out-of-state
business is not subject to South Carolina’s withholding requirement solely due to the shift of
employees working on the employer’s premises outside of South Carolina to teleworking from
South Carolina. Accordingly, the wages of a South Carolina resident employee temporarily
working remotely from South Carolina instead of their normal out-of-state business location are
not subject to South Carolina withholding if the employer is withholding income taxes on behalf
of the other state.

Nexus Establishment
The Department will not use changes solely in an employee’s temporary work location due to the
remote work requirements arising from, or during, the COVID-19 relief period (March 13, 2020
– September 30, 2020) as a basis for establishing nexus 1 or altering apportionment of income.
If you would like to receive notice of any future relief of the withholding and nexus requirements
provided above or future Policy updates, sign up on the Policy Division’s web page at
dor.sc.gov/policy/index.

1

Including for Public Law 86-272 purposes.
2