Chief Counsel Corner October 2020 Tax News

Update to COVID-19 FAQs – Teleworking Employees/Nexus

Jozel Brunett, Taxpayers' Rights Advocate.

Jozel Brunett
Chief Counsel

On March 19, 2020, California Governor Gavin Newson issued Executive Order N-33-20 in response to the COVID-19 pandemic. As provided by Executive Order N-33-20, residents are required to stay at home in order to prevent the spread of the virus. As a result, many individuals living in California who ordinarily did not telework from California began to do so.

In some instances, the individuals living in California who were now teleworking from their homes might be employed by corporations that previously had no connections with California. To address whether these corporations might be considered to be doing business in California and to address concerns pertaining to a corporation's protections pursuant to Public Law 86-272, codified at 15 U.S.C. section 581 et seq., the Franchise Tax Board has published a series of frequently asked questions ("FAQs").

The FAQs will provide guidance as to the possible California franchise tax implications to corporations that previously had no connections with California but now have an employee indefinitely teleworking from California due to the Governor's Executive Order. The FAQs have been posted to the Franchise Tax Board's COVID-19 webpage its public website. The responses to the FAQs are applicable until the Governor's Executive Order is no longer in effect.