By Lora L. Bahrey-Ament, CPA, and Kevin Wilkes, JD
As COVID-19 vaccinations continue to roll out, many employers are pondering an imminent return to the physical office. Still, businesses are not blind. They experienced first-hand the benefits of a remote work environment, such as increased employee productivity and reduced office rent and utilities costs. Many employees appreciate the time saved from foregoing a daily commute and the increased flexibility afforded by remote work. It is adding up that remote work may be less “temporary” than we initially expected. Once the pandemic is under control, remote work will likely continue at higher levels than before the pandemic. This article discusses several remote work issues that are unique to the accounting industry.
Travel restrictions and the need for social distancing required both the auditors and the audited to adopt new methods of conducting examinations. Traditionally, audit fieldwork involved a team of auditors spending weeks onsite at the client’s premises in a conference room. Due to technological advances, accounting firms gradually expanded the use of remote audit procedures, incrementally transitioning to virtual audits. Below are challenges auditors may face conducting a virtual audit, new risks audited organizations could encounter, and potential measures to mitigate related risks.
Due to the pandemic, millions of employees are telecommuting. If an employee works from home in a state that differs from the state where the employee had worked for the employer before the pandemic, the employer should consider several tax issues.
The shift toward telecommuting during the pandemic returned the physical presence nexus test to the forefront. Businesses should be aware that telecommuting employees can impact sales and use tax reporting obligations. In some states, a single employee working in the state triggers sales and use tax reporting obligations for an employer, even if the employer otherwise lacks a physical presence in the state. State guidance on sales and use tax nexus for employees working remotely during the pandemic varies. A few states, such as Pennsylvania, issued guidance temporarily waiving sales and use tax consequences of workers telecommuting due to the pandemic, but most states have not addressed the issue.
In a state that considers the presence of an employee sufficient to establish nexus, the fact that a taxpayer’s activity is below economic nexus thresholds based on sales volume and number of transactions is irrelevant. Physical presence is sufficient to establish nexus, requiring the business to register and collect applicable sales and use taxes. Businesses should consider the possibility they have unexpected sales and use tax reporting obligations in states from which employees are newly telecommuting. This consideration is particularly important for small to medium-size companies whose physical footprint absent telecommuting is otherwise limited, and whose sales in most states do not exceed economic nexus thresholds. Because sales and use tax guidance on pandemic-related telecommuting is inconsistent and subject to change, it is important for businesses to continue monitoring developments in this area.
Even before the dramatic changes caused by the pandemic, many CPAs recognized the industry was experiencing a shift as new technology emerged. Most public accounting firms already used virtual meeting platforms and electronic information-sharing portals. A paperless work environment was already the norm. As pandemic-related shutdowns required employees to work remotely, accounting firms that embraced technological advances found it easier to adapt, maintain productivity, and meet deadlines. Firms that were slower to adopt technological changes found it more difficult.
Clients expect their CPAs to have technologies that can be used to facilitate secure transmission of data, real-time communication, and a collaborative virtual environment that could serve as a substitute for in-person meetings. Amid the pandemic, videoconferencing replaced most face-to-face meetings and information was exchanged via online portals or other secure means. Accounting firms and businesses that, to the fullest extent possible, leveraged tools like Microsoft Teams to collaborate in real-time with clients and team members found it easier to deliver excellent service. Effective virtual collaboration also reduced, if not eliminated, hiccups associated with version control of deliverables and miscommunication.
Once the pandemic subsides, some predict adaptations made, especially increased use of technologies to work more efficiently and service clients remotely, will continue. A remote environment reduces office space, cuts costs related to maintaining office space, and frees employees from spending time stuck in traffic during a daily commute. Expectations regarding work flexibility are changing as the technology evolves, and CPA firms should continue leveraging technology to enhance remote workers’ productivity, increase profitability, improve service quality, and retain top talent.
Lora L. Bahrey-Ament, CPA, is a tax manager with Louis Plung & Company in Pittsburgh. She can be reached at lora.ament@louisplung.com.
Kevin Wilkes, JD, is a principal for Louis Plung & Company in Pittsburgh. He can be reached at kwilkes@louisplung.com.
Sign up for weekly professional and technical updates from PICPA's blogs, podcasts, and discussion board topics by completing this form.
By Lora L. Bahrey-Ament, CPA, and Kevin Wilkes, JD
As COVID-19 vaccinations continue to roll out, many employers are pondering an imminent return to the physical office. Still, businesses are not blind. They experienced first-hand the benefits of a remote work environment, such as increased employee productivity and reduced office rent and utilities costs. Many employees appreciate the time saved from foregoing a daily commute and the increased flexibility afforded by remote work. It is adding up that remote work may be less “temporary” than we initially expected. Once the pandemic is under control, remote work will likely continue at higher levels than before the pandemic. This article discusses several remote work issues that are unique to the accounting industry.
Travel restrictions and the need for social distancing required both the auditors and the audited to adopt new methods of conducting examinations. Traditionally, audit fieldwork involved a team of auditors spending weeks onsite at the client’s premises in a conference room. Due to technological advances, accounting firms gradually expanded the use of remote audit procedures, incrementally transitioning to virtual audits. Below are challenges auditors may face conducting a virtual audit, new risks audited organizations could encounter, and potential measures to mitigate related risks.
Due to the pandemic, millions of employees are telecommuting. If an employee works from home in a state that differs from the state where the employee had worked for the employer before the pandemic, the employer should consider several tax issues.
The shift toward telecommuting during the pandemic returned the physical presence nexus test to the forefront. Businesses should be aware that telecommuting employees can impact sales and use tax reporting obligations. In some states, a single employee working in the state triggers sales and use tax reporting obligations for an employer, even if the employer otherwise lacks a physical presence in the state. State guidance on sales and use tax nexus for employees working remotely during the pandemic varies. A few states, such as Pennsylvania, issued guidance temporarily waiving sales and use tax consequences of workers telecommuting due to the pandemic, but most states have not addressed the issue.
In a state that considers the presence of an employee sufficient to establish nexus, the fact that a taxpayer’s activity is below economic nexus thresholds based on sales volume and number of transactions is irrelevant. Physical presence is sufficient to establish nexus, requiring the business to register and collect applicable sales and use taxes. Businesses should consider the possibility they have unexpected sales and use tax reporting obligations in states from which employees are newly telecommuting. This consideration is particularly important for small to medium-size companies whose physical footprint absent telecommuting is otherwise limited, and whose sales in most states do not exceed economic nexus thresholds. Because sales and use tax guidance on pandemic-related telecommuting is inconsistent and subject to change, it is important for businesses to continue monitoring developments in this area.
Even before the dramatic changes caused by the pandemic, many CPAs recognized the industry was experiencing a shift as new technology emerged. Most public accounting firms already used virtual meeting platforms and electronic information-sharing portals. A paperless work environment was already the norm. As pandemic-related shutdowns required employees to work remotely, accounting firms that embraced technological advances found it easier to adapt, maintain productivity, and meet deadlines. Firms that were slower to adopt technological changes found it more difficult.
Clients expect their CPAs to have technologies that can be used to facilitate secure transmission of data, real-time communication, and a collaborative virtual environment that could serve as a substitute for in-person meetings. Amid the pandemic, videoconferencing replaced most face-to-face meetings and information was exchanged via online portals or other secure means. Accounting firms and businesses that, to the fullest extent possible, leveraged tools like Microsoft Teams to collaborate in real-time with clients and team members found it easier to deliver excellent service. Effective virtual collaboration also reduced, if not eliminated, hiccups associated with version control of deliverables and miscommunication.
Once the pandemic subsides, some predict adaptations made, especially increased use of technologies to work more efficiently and service clients remotely, will continue. A remote environment reduces office space, cuts costs related to maintaining office space, and frees employees from spending time stuck in traffic during a daily commute. Expectations regarding work flexibility are changing as the technology evolves, and CPA firms should continue leveraging technology to enhance remote workers’ productivity, increase profitability, improve service quality, and retain top talent.
Lora L. Bahrey-Ament, CPA, is a tax manager with Louis Plung & Company in Pittsburgh. She can be reached at lora.ament@louisplung.com.
Kevin Wilkes, JD, is a principal for Louis Plung & Company in Pittsburgh. He can be reached at kwilkes@louisplung.com.
Sign up for weekly professional and technical updates from PICPA's blogs, podcasts, and discussion board topics by completing this form.
By Lora L. Bahrey-Ament, CPA, and Kevin Wilkes, JD
As COVID-19 vaccinations continue to roll out, many employers are pondering an imminent return to the physical office. Still, businesses are not blind. They experienced first-hand the benefits of a remote work environment, such as increased employee productivity and reduced office rent and utilities costs. Many employees appreciate the time saved from foregoing a daily commute and the increased flexibility afforded by remote work. It is adding up that remote work may be less “temporary” than we initially expected. Once the pandemic is under control, remote work will likely continue at higher levels than before the pandemic. This article discusses several remote work issues that are unique to the accounting industry.
Travel restrictions and the need for social distancing required both the auditors and the audited to adopt new methods of conducting examinations. Traditionally, audit fieldwork involved a team of auditors spending weeks onsite at the client’s premises in a conference room. Due to technological advances, accounting firms gradually expanded the use of remote audit procedures, incrementally transitioning to virtual audits. Below are challenges auditors may face conducting a virtual audit, new risks audited organizations could encounter, and potential measures to mitigate related risks.
Due to the pandemic, millions of employees are telecommuting. If an employee works from home in a state that differs from the state where the employee had worked for the employer before the pandemic, the employer should consider several tax issues.
The shift toward telecommuting during the pandemic returned the physical presence nexus test to the forefront. Businesses should be aware that telecommuting employees can impact sales and use tax reporting obligations. In some states, a single employee working in the state triggers sales and use tax reporting obligations for an employer, even if the employer otherwise lacks a physical presence in the state. State guidance on sales and use tax nexus for employees working remotely during the pandemic varies. A few states, such as Pennsylvania, issued guidance temporarily waiving sales and use tax consequences of workers telecommuting due to the pandemic, but most states have not addressed the issue.
In a state that considers the presence of an employee sufficient to establish nexus, the fact that a taxpayer’s activity is below economic nexus thresholds based on sales volume and number of transactions is irrelevant. Physical presence is sufficient to establish nexus, requiring the business to register and collect applicable sales and use taxes. Businesses should consider the possibility they have unexpected sales and use tax reporting obligations in states from which employees are newly telecommuting. This consideration is particularly important for small to medium-size companies whose physical footprint absent telecommuting is otherwise limited, and whose sales in most states do not exceed economic nexus thresholds. Because sales and use tax guidance on pandemic-related telecommuting is inconsistent and subject to change, it is important for businesses to continue monitoring developments in this area.
Even before the dramatic changes caused by the pandemic, many CPAs recognized the industry was experiencing a shift as new technology emerged. Most public accounting firms already used virtual meeting platforms and electronic information-sharing portals. A paperless work environment was already the norm. As pandemic-related shutdowns required employees to work remotely, accounting firms that embraced technological advances found it easier to adapt, maintain productivity, and meet deadlines. Firms that were slower to adopt technological changes found it more difficult.
Clients expect their CPAs to have technologies that can be used to facilitate secure transmission of data, real-time communication, and a collaborative virtual environment that could serve as a substitute for in-person meetings. Amid the pandemic, videoconferencing replaced most face-to-face meetings and information was exchanged via online portals or other secure means. Accounting firms and businesses that, to the fullest extent possible, leveraged tools like Microsoft Teams to collaborate in real-time with clients and team members found it easier to deliver excellent service. Effective virtual collaboration also reduced, if not eliminated, hiccups associated with version control of deliverables and miscommunication.
Once the pandemic subsides, some predict adaptations made, especially increased use of technologies to work more efficiently and service clients remotely, will continue. A remote environment reduces office space, cuts costs related to maintaining office space, and frees employees from spending time stuck in traffic during a daily commute. Expectations regarding work flexibility are changing as the technology evolves, and CPA firms should continue leveraging technology to enhance remote workers’ productivity, increase profitability, improve service quality, and retain top talent.
Lora L. Bahrey-Ament, CPA, is a tax manager with Louis Plung & Company in Pittsburgh. She can be reached at lora.ament@louisplung.com.
Kevin Wilkes, JD, is a principal for Louis Plung & Company in Pittsburgh. He can be reached at kwilkes@louisplung.com.
Sign up for weekly professional and technical updates from PICPA's blogs, podcasts, and discussion board topics by completing this form.
By Lora L. Bahrey-Ament, CPA, and Kevin Wilkes, JD
As COVID-19 vaccinations continue to roll out, many employers are pondering an imminent return to the physical office. Still, businesses are not blind. They experienced first-hand the benefits of a remote work environment, such as increased employee productivity and reduced office rent and utilities costs. Many employees appreciate the time saved from foregoing a daily commute and the increased flexibility afforded by remote work. It is adding up that remote work may be less “temporary” than we initially expected. Once the pandemic is under control, remote work will likely continue at higher levels than before the pandemic. This article discusses several remote work issues that are unique to the accounting industry.
Travel restrictions and the need for social distancing required both the auditors and the audited to adopt new methods of conducting examinations. Traditionally, audit fieldwork involved a team of auditors spending weeks onsite at the client’s premises in a conference room. Due to technological advances, accounting firms gradually expanded the use of remote audit procedures, incrementally transitioning to virtual audits. Below are challenges auditors may face conducting a virtual audit, new risks audited organizations could encounter, and potential measures to mitigate related risks.
Due to the pandemic, millions of employees are telecommuting. If an employee works from home in a state that differs from the state where the employee had worked for the employer before the pandemic, the employer should consider several tax issues.
The shift toward telecommuting during the pandemic returned the physical presence nexus test to the forefront. Businesses should be aware that telecommuting employees can impact sales and use tax reporting obligations. In some states, a single employee working in the state triggers sales and use tax reporting obligations for an employer, even if the employer otherwise lacks a physical presence in the state. State guidance on sales and use tax nexus for employees working remotely during the pandemic varies. A few states, such as Pennsylvania, issued guidance temporarily waiving sales and use tax consequences of workers telecommuting due to the pandemic, but most states have not addressed the issue.
In a state that considers the presence of an employee sufficient to establish nexus, the fact that a taxpayer’s activity is below economic nexus thresholds based on sales volume and number of transactions is irrelevant. Physical presence is sufficient to establish nexus, requiring the business to register and collect applicable sales and use taxes. Businesses should consider the possibility they have unexpected sales and use tax reporting obligations in states from which employees are newly telecommuting. This consideration is particularly important for small to medium-size companies whose physical footprint absent telecommuting is otherwise limited, and whose sales in most states do not exceed economic nexus thresholds. Because sales and use tax guidance on pandemic-related telecommuting is inconsistent and subject to change, it is important for businesses to continue monitoring developments in this area.
Even before the dramatic changes caused by the pandemic, many CPAs recognized the industry was experiencing a shift as new technology emerged. Most public accounting firms already used virtual meeting platforms and electronic information-sharing portals. A paperless work environment was already the norm. As pandemic-related shutdowns required employees to work remotely, accounting firms that embraced technological advances found it easier to adapt, maintain productivity, and meet deadlines. Firms that were slower to adopt technological changes found it more difficult.
Clients expect their CPAs to have technologies that can be used to facilitate secure transmission of data, real-time communication, and a collaborative virtual environment that could serve as a substitute for in-person meetings. Amid the pandemic, videoconferencing replaced most face-to-face meetings and information was exchanged via online portals or other secure means. Accounting firms and businesses that, to the fullest extent possible, leveraged tools like Microsoft Teams to collaborate in real-time with clients and team members found it easier to deliver excellent service. Effective virtual collaboration also reduced, if not eliminated, hiccups associated with version control of deliverables and miscommunication.
Once the pandemic subsides, some predict adaptations made, especially increased use of technologies to work more efficiently and service clients remotely, will continue. A remote environment reduces office space, cuts costs related to maintaining office space, and frees employees from spending time stuck in traffic during a daily commute. Expectations regarding work flexibility are changing as the technology evolves, and CPA firms should continue leveraging technology to enhance remote workers’ productivity, increase profitability, improve service quality, and retain top talent.
Lora L. Bahrey-Ament, CPA, is a tax manager with Louis Plung & Company in Pittsburgh. She can be reached at lora.ament@louisplung.com.
Kevin Wilkes, JD, is a principal for Louis Plung & Company in Pittsburgh. He can be reached at kwilkes@louisplung.com.
Sign up for weekly professional and technical updates from PICPA's blogs, podcasts, and discussion board topics by completing this form.
By Lora L. Bahrey-Ament, CPA, and Kevin Wilkes, JD
As COVID-19 vaccinations continue to roll out, many employers are pondering an imminent return to the physical office. Still, businesses are not blind. They experienced first-hand the benefits of a remote work environment, such as increased employee productivity and reduced office rent and utilities costs. Many employees appreciate the time saved from foregoing a daily commute and the increased flexibility afforded by remote work. It is adding up that remote work may be less “temporary” than we initially expected. Once the pandemic is under control, remote work will likely continue at higher levels than before the pandemic. This article discusses several remote work issues that are unique to the accounting industry.
Travel restrictions and the need for social distancing required both the auditors and the audited to adopt new methods of conducting examinations. Traditionally, audit fieldwork involved a team of auditors spending weeks onsite at the client’s premises in a conference room. Due to technological advances, accounting firms gradually expanded the use of remote audit procedures, incrementally transitioning to virtual audits. Below are challenges auditors may face conducting a virtual audit, new risks audited organizations could encounter, and potential measures to mitigate related risks.
Due to the pandemic, millions of employees are telecommuting. If an employee works from home in a state that differs from the state where the employee had worked for the employer before the pandemic, the employer should consider several tax issues.
The shift toward telecommuting during the pandemic returned the physical presence nexus test to the forefront. Businesses should be aware that telecommuting employees can impact sales and use tax reporting obligations. In some states, a single employee working in the state triggers sales and use tax reporting obligations for an employer, even if the employer otherwise lacks a physical presence in the state. State guidance on sales and use tax nexus for employees working remotely during the pandemic varies. A few states, such as Pennsylvania, issued guidance temporarily waiving sales and use tax consequences of workers telecommuting due to the pandemic, but most states have not addressed the issue.
In a state that considers the presence of an employee sufficient to establish nexus, the fact that a taxpayer’s activity is below economic nexus thresholds based on sales volume and number of transactions is irrelevant. Physical presence is sufficient to establish nexus, requiring the business to register and collect applicable sales and use taxes. Businesses should consider the possibility they have unexpected sales and use tax reporting obligations in states from which employees are newly telecommuting. This consideration is particularly important for small to medium-size companies whose physical footprint absent telecommuting is otherwise limited, and whose sales in most states do not exceed economic nexus thresholds. Because sales and use tax guidance on pandemic-related telecommuting is inconsistent and subject to change, it is important for businesses to continue monitoring developments in this area.
Even before the dramatic changes caused by the pandemic, many CPAs recognized the industry was experiencing a shift as new technology emerged. Most public accounting firms already used virtual meeting platforms and electronic information-sharing portals. A paperless work environment was already the norm. As pandemic-related shutdowns required employees to work remotely, accounting firms that embraced technological advances found it easier to adapt, maintain productivity, and meet deadlines. Firms that were slower to adopt technological changes found it more difficult.
Clients expect their CPAs to have technologies that can be used to facilitate secure transmission of data, real-time communication, and a collaborative virtual environment that could serve as a substitute for in-person meetings. Amid the pandemic, videoconferencing replaced most face-to-face meetings and information was exchanged via online portals or other secure means. Accounting firms and businesses that, to the fullest extent possible, leveraged tools like Microsoft Teams to collaborate in real-time with clients and team members found it easier to deliver excellent service. Effective virtual collaboration also reduced, if not eliminated, hiccups associated with version control of deliverables and miscommunication.
Once the pandemic subsides, some predict adaptations made, especially increased use of technologies to work more efficiently and service clients remotely, will continue. A remote environment reduces office space, cuts costs related to maintaining office space, and frees employees from spending time stuck in traffic during a daily commute. Expectations regarding work flexibility are changing as the technology evolves, and CPA firms should continue leveraging technology to enhance remote workers’ productivity, increase profitability, improve service quality, and retain top talent.
Lora L. Bahrey-Ament, CPA, is a tax manager with Louis Plung & Company in Pittsburgh. She can be reached at lora.ament@louisplung.com.
Kevin Wilkes, JD, is a principal for Louis Plung & Company in Pittsburgh. He can be reached at kwilkes@louisplung.com.
Sign up for weekly professional and technical updates from PICPA's blogs, podcasts, and discussion board topics by completing this form.
By Lora L. Bahrey-Ament, CPA, and Kevin Wilkes, JD
As COVID-19 vaccinations continue to roll out, many employers are pondering an imminent return to the physical office. Still, businesses are not blind. They experienced first-hand the benefits of a remote work environment, such as increased employee productivity and reduced office rent and utilities costs. Many employees appreciate the time saved from foregoing a daily commute and the increased flexibility afforded by remote work. It is adding up that remote work may be less “temporary” than we initially expected. Once the pandemic is under control, remote work will likely continue at higher levels than before the pandemic. This article discusses several remote work issues that are unique to the accounting industry.
Travel restrictions and the need for social distancing required both the auditors and the audited to adopt new methods of conducting examinations. Traditionally, audit fieldwork involved a team of auditors spending weeks onsite at the client’s premises in a conference room. Due to technological advances, accounting firms gradually expanded the use of remote audit procedures, incrementally transitioning to virtual audits. Below are challenges auditors may face conducting a virtual audit, new risks audited organizations could encounter, and potential measures to mitigate related risks.
Due to the pandemic, millions of employees are telecommuting. If an employee works from home in a state that differs from the state where the employee had worked for the employer before the pandemic, the employer should consider several tax issues.
The shift toward telecommuting during the pandemic returned the physical presence nexus test to the forefront. Businesses should be aware that telecommuting employees can impact sales and use tax reporting obligations. In some states, a single employee working in the state triggers sales and use tax reporting obligations for an employer, even if the employer otherwise lacks a physical presence in the state. State guidance on sales and use tax nexus for employees working remotely during the pandemic varies. A few states, such as Pennsylvania, issued guidance temporarily waiving sales and use tax consequences of workers telecommuting due to the pandemic, but most states have not addressed the issue.
In a state that considers the presence of an employee sufficient to establish nexus, the fact that a taxpayer’s activity is below economic nexus thresholds based on sales volume and number of transactions is irrelevant. Physical presence is sufficient to establish nexus, requiring the business to register and collect applicable sales and use taxes. Businesses should consider the possibility they have unexpected sales and use tax reporting obligations in states from which employees are newly telecommuting. This consideration is particularly important for small to medium-size companies whose physical footprint absent telecommuting is otherwise limited, and whose sales in most states do not exceed economic nexus thresholds. Because sales and use tax guidance on pandemic-related telecommuting is inconsistent and subject to change, it is important for businesses to continue monitoring developments in this area.
Even before the dramatic changes caused by the pandemic, many CPAs recognized the industry was experiencing a shift as new technology emerged. Most public accounting firms already used virtual meeting platforms and electronic information-sharing portals. A paperless work environment was already the norm. As pandemic-related shutdowns required employees to work remotely, accounting firms that embraced technological advances found it easier to adapt, maintain productivity, and meet deadlines. Firms that were slower to adopt technological changes found it more difficult.
Clients expect their CPAs to have technologies that can be used to facilitate secure transmission of data, real-time communication, and a collaborative virtual environment that could serve as a substitute for in-person meetings. Amid the pandemic, videoconferencing replaced most face-to-face meetings and information was exchanged via online portals or other secure means. Accounting firms and businesses that, to the fullest extent possible, leveraged tools like Microsoft Teams to collaborate in real-time with clients and team members found it easier to deliver excellent service. Effective virtual collaboration also reduced, if not eliminated, hiccups associated with version control of deliverables and miscommunication.
Once the pandemic subsides, some predict adaptations made, especially increased use of technologies to work more efficiently and service clients remotely, will continue. A remote environment reduces office space, cuts costs related to maintaining office space, and frees employees from spending time stuck in traffic during a daily commute. Expectations regarding work flexibility are changing as the technology evolves, and CPA firms should continue leveraging technology to enhance remote workers’ productivity, increase profitability, improve service quality, and retain top talent.
Lora L. Bahrey-Ament, CPA, is a tax manager with Louis Plung & Company in Pittsburgh. She can be reached at lora.ament@louisplung.com.
Kevin Wilkes, JD, is a principal for Louis Plung & Company in Pittsburgh. He can be reached at kwilkes@louisplung.com.
Sign up for weekly professional and technical updates from PICPA's blogs, podcasts, and discussion board topics by completing this form.
By Lora L. Bahrey-Ament, CPA, and Kevin Wilkes, JD
As COVID-19 vaccinations continue to roll out, many employers are pondering an imminent return to the physical office. Still, businesses are not blind. They experienced first-hand the benefits of a remote work environment, such as increased employee productivity and reduced office rent and utilities costs. Many employees appreciate the time saved from foregoing a daily commute and the increased flexibility afforded by remote work. It is adding up that remote work may be less “temporary” than we initially expected. Once the pandemic is under control, remote work will likely continue at higher levels than before the pandemic. This article discusses several remote work issues that are unique to the accounting industry.
Travel restrictions and the need for social distancing required both the auditors and the audited to adopt new methods of conducting examinations. Traditionally, audit fieldwork involved a team of auditors spending weeks onsite at the client’s premises in a conference room. Due to technological advances, accounting firms gradually expanded the use of remote audit procedures, incrementally transitioning to virtual audits. Below are challenges auditors may face conducting a virtual audit, new risks audited organizations could encounter, and potential measures to mitigate related risks.
Due to the pandemic, millions of employees are telecommuting. If an employee works from home in a state that differs from the state where the employee had worked for the employer before the pandemic, the employer should consider several tax issues.
The shift toward telecommuting during the pandemic returned the physical presence nexus test to the forefront. Businesses should be aware that telecommuting employees can impact sales and use tax reporting obligations. In some states, a single employee working in the state triggers sales and use tax reporting obligations for an employer, even if the employer otherwise lacks a physical presence in the state. State guidance on sales and use tax nexus for employees working remotely during the pandemic varies. A few states, such as Pennsylvania, issued guidance temporarily waiving sales and use tax consequences of workers telecommuting due to the pandemic, but most states have not addressed the issue.
In a state that considers the presence of an employee sufficient to establish nexus, the fact that a taxpayer’s activity is below economic nexus thresholds based on sales volume and number of transactions is irrelevant. Physical presence is sufficient to establish nexus, requiring the business to register and collect applicable sales and use taxes. Businesses should consider the possibility they have unexpected sales and use tax reporting obligations in states from which employees are newly telecommuting. This consideration is particularly important for small to medium-size companies whose physical footprint absent telecommuting is otherwise limited, and whose sales in most states do not exceed economic nexus thresholds. Because sales and use tax guidance on pandemic-related telecommuting is inconsistent and subject to change, it is important for businesses to continue monitoring developments in this area.
Even before the dramatic changes caused by the pandemic, many CPAs recognized the industry was experiencing a shift as new technology emerged. Most public accounting firms already used virtual meeting platforms and electronic information-sharing portals. A paperless work environment was already the norm. As pandemic-related shutdowns required employees to work remotely, accounting firms that embraced technological advances found it easier to adapt, maintain productivity, and meet deadlines. Firms that were slower to adopt technological changes found it more difficult.
Clients expect their CPAs to have technologies that can be used to facilitate secure transmission of data, real-time communication, and a collaborative virtual environment that could serve as a substitute for in-person meetings. Amid the pandemic, videoconferencing replaced most face-to-face meetings and information was exchanged via online portals or other secure means. Accounting firms and businesses that, to the fullest extent possible, leveraged tools like Microsoft Teams to collaborate in real-time with clients and team members found it easier to deliver excellent service. Effective virtual collaboration also reduced, if not eliminated, hiccups associated with version control of deliverables and miscommunication.
Once the pandemic subsides, some predict adaptations made, especially increased use of technologies to work more efficiently and service clients remotely, will continue. A remote environment reduces office space, cuts costs related to maintaining office space, and frees employees from spending time stuck in traffic during a daily commute. Expectations regarding work flexibility are changing as the technology evolves, and CPA firms should continue leveraging technology to enhance remote workers’ productivity, increase profitability, improve service quality, and retain top talent.
Lora L. Bahrey-Ament, CPA, is a tax manager with Louis Plung & Company in Pittsburgh. She can be reached at lora.ament@louisplung.com.
Kevin Wilkes, JD, is a principal for Louis Plung & Company in Pittsburgh. He can be reached at kwilkes@louisplung.com.
Sign up for weekly professional and technical updates from PICPA's blogs, podcasts, and discussion board topics by completing this form.
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