Unintentionally Becoming a Taxable Resident of Georgia During COVID
The COVID-19 pandemic forced many employees to work remotely, and some worked in states other than those where they usually worked. The shift caused much confusion for employers who questioned whether they had new tax obligations to the states from which employees teleworked. Businesses that had no presence in a state before March 2020 had to consider potential employer withholding tax obligations and income tax obligations to states where employees now worked. Some state tax agencies issued guidance that placated employer concerns.
1 While some states may have forgone employer withholding tax obligations and nexus enforcement, such relief did not extend to those who may have moved into the state temporarily.
During this tax season, advisers should not overlook whether those who remained in a new state for an extended period in 2020 are taxable residents in that state for 2020. Much of the law is statutory. State revenue departments may be unable or unwilling to ignore or waive statutes.
Georgia provides a good backdrop for examination of the issue. The issue turns on whether a longtime Florida domicile who is in Georgia temporarily during 2020 is subject to Georgia income tax on some or all of the Florida resident’s 2020 income. In the example, the taxpayers are a married couple and have a Florida domicile. In 2020 their trip to Georgia for a few weeks becomes an extended, months long stay. Unintentionally, the visit to Georgia results in the imposition of Georgia income tax on 100 percent of the taxpayers’ income. This article provides details and analysis of the facts based on Georgia statutory law on residency.
Richard C. Litwin is an Atlanta attorney and former chair of the tax section of the Atlanta Bar Association and the tax section of the State Bar of Georgia. He is co-moderator of the Georgia Department of Revenue Attorney Liaison Committee and serves on the board of the National Association of State Bar Tax Sections. Before private practice, and from 1990-1995, Litwin was an assistant attorney general in the Tax Section of the Office of the Georgia Attorney General. In this article, Litwin examines the potential Georgia income tax obligations of individuals who resided in the state for reasons related to the COVID-19 pandemic in 2020.