Remote Working

RI extends regulation on withholding for employees working remotely during COVID-19.

The Rhode Island Division of Taxation has extended the emergency regulation, 280-RICR-20-55-14, which provides withholding tax guidance for employers that have employees temporarily working remotely due to the coronavirus (COVID-19) pandemic, to June 18, 2021.

The income of employees who work for a Rhode Island (RI) business who are working remotely (temporarily) in another state due to COVID-19, should continue to be treated as RI-source income for RI withholding tax purposes

If you are an employer in a state other than RI, you will not be required to withhold RI income taxes from employee wages of a RI resident who is working at home (or in state) as a direct result of COVID-19.

Emergency Rule Limitations:

  • Rule applies to employers whose employees are temporarily performing remote work outside of RI, solely because of the ongoing COVID-19 State of Emergency;
  • It does not apply to employers outside of RI who were withholding RI taxes from the wages of their employees working remotely in RI prior to March 9, 2020;
  • IT does not apply to employers in RI who were withholding another state’s taxes from the wages of employees working remotely in that other state prior to March 9, 2020;
  • Rule does not apply in situations where both the employer and its employees, though working remotely, are situated in the same state;
  • It applies to wages earned on or after March 9, 2020, until one of the relevant specified conditions is satisfied as it relates to the employer; and
  • Rule does not apply to payments required to be made under the RI Employment Security Act, the RI Temporary Disability Insurance Act, or the Job Development Assessment.

According to the Rhode Island Division of Taxation, the emergency regulation will be in effect for 120 days, or up to 180 days if extended, unless one of the following occurs:

  • COVID-19 State of Emergency in RI has ended;
  • Permanent rules and regulations are announced; or
  • The tax administrator enters into a withholding agreement with any other state that would then govern the withholding of income taxes between RI and the other signatory state.

For more information please contact us at 401-831-0200.

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