Employers Lean on Congress to Solve Work-From-Home Tax Dilemma

Businesses are pushing lawmakers to streamline income tax requirements so that workers and employers don’t risk double taxation and taxation by different states as the months of telework persist.

Payroll departments are used to handling tax withholding obligations for multiple states. But once workers fled to homes and other locations, many in different states—and the work-from-home period stretched beyond any state’s regulations—daunting questions arose.

The complications involve not only individual workers’ taxes but company income taxes as well. Payroll executives worry that the mere presence of employees working in new states might create “tax nexus,” sufficient contacts that would subject ...