Tax Partner Seth Entin was quoted in a TaxNotes article describing the effects of the COVID-19 pandemic on tax residency rules worldwide. As cross-border workers are forced to remain in countries because of travel restrictions, they face unforeseen tax obligations. For example, in the United States, nonresident workers may find themselves subject to federal income tax obligations because of the substantial presence test. One notable exception is the medical exception, in which an individual's stay does not count toward the substantial presence test if they cannot leave the country because of medical reasons. Mr. Entin explains that the Department of the Treasury has the authority to expand this exception to include individuals who themselves are not sick but who are nonetheless affected by travel restrictions as a result of the pandemic.
"[The] tax community has to push Treasury and the IRS because it is not necessarily high on their current list of priorities," he said. "...Nonresidents could potentially experience a serious situation unless authorities expand the exceptions."
READ: Countries Relax Tax Residency Rules for Cross-Border Workers