Restraint Requirements for Remote Workers in South Carolina
South Carolina Department of Revenue Announces Extension of Relief Regarding Bond Withholding and Income Tax Requirements for Remote Workers
Due to the increase in remote work caused by the pandemic, the state has provided additional guidance regarding employer restraint requirements for South Carolina employees who work remotely due to COVID-19, temporarily extending the easing of certain bonds and the withholding requirements until December 31. , 2021.
General rule: restraint requirements in South Carolina
South Carolina Code Section 12-8-520 requires South Carolina businesses to withhold income tax from the wages of residents and non-residents who work in the state. Residents of South Carolina who work out of state are not subject to South Carolina withholding tax if wages are subject to the withholding laws of the state in which they are earned and the employer withhold income taxes on behalf of the other state.
Relief for businesses with remote workers
On May 15, 2020, the Department issued SC Newsletter # 20-11 announcing that South Carolina will not use a temporary change in an employee’s workplace due to Covid-19 to impose a restraint requirement in South Carolina. This letter originally provided that the relief period would run from March 13, 2020 to September 30, 2020.
On August 25, 2021, the Department issued Newsletter SC # 21-22, which extended this temporary relief until December 31, 2021. This relief will not apply to workers who switch from temporary to permanent remote work.
SC Company with employees who move temporarily outside of South Carolina
A South Carolina company’s restraint requirements will not change because its employees work out of state, as long as the remote work is pandemic and temporary in nature. As a result, salaries for non-resident employees temporarily working remotely in another state instead of their South Carolina business location are still subject to withholding in South Carolina.
Out-of-State businesses with employees temporarily moving to South Carolina
Generally, salaries for South Carolina residents who work out of state are not subject to South Carolina withholding. If those South Carolina residents switch to telecommuting from South Carolina due to the pandemic, out-of-state activities will not be subject to the South Carolina holdback requirement. Accordingly, employee wages will not be subject to South Carolina withholding if the employer withholds income taxes on behalf of the other state.
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