Stuck Workers Get IRS Relief From Being Taxed as U.S. Businesses

Workers stuck in the U.S. because of coronavirus-related travel disruptions won’t be taxed as U.S. businesses, the IRS said.

The relief to stranded workers came in a Friday update to frequently asked questions on travel-related tax issues on the IRS website. Previous relief measures expired and left trapped workers in doubt of their tax obligations.

• Affected individuals and entities will not be subject to a 30% tax under Section 871(a) or Section 881(a), because they won’t be treated as having created a U.S. trade or business (USTB) or permanent establishment, the update said.
• The FAQs also urge affected individuals to continue to document any business conducted in the U.S. and travel-related information so that the documentation can be presented to the IRS upon request.
• The IRS in April released relief measures (Rev. Proc 2020-20, Rev. Proc. 2020-27) that allowed nonresident individuals, foreign corporations, and partnerships to select a 60-day period between Feb. 1 and April 1 where the IRS won’t consider their activity in the U.S. to trigger a tax liability.