IRS issues guidance for individuals and businesses impacted by travel disruptions

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April 2020

Overview

The Treasury Department and the IRS on April 21 issued guidance in the form of Frequently Asked Questions (FAQs) and Revenue Procedures 2020-20 (RP 2020-20) and 2020-27 (RP 2020-27), regarding relief for businesses and individuals impacted by travel disruptions related to the COVID-19 pandemic:  

  • RP 2020-20 provides that certain COVID-19 related travel disruptions for up to a 60-day period should not cause a nonresident individual to be treated as a US tax resident for federal income tax purposes or impact their tax treaty qualification with respect to income from dependent personal services.  
  • RP 2020-27 includes relief for US citizens living abroad and impacted by certain COVID-19 travel disruptions so that they still can qualify for an election to exclude their foreign earned income and housing cost amount from gross income under Section 911(d)(1). 
  • The FAQs clarify that certain activities and services that occur in the United States for a period of up to 60 days solely because of the COVID-19 pandemic should not impact certain US trade or business (USTB) and permanent establishment (PE) determinations.

The takeaway

The recently issued guidance provides welcome relief to individuals and businesses determining certain US federal income tax impacts as a result of the COVID-19 pandemic.  Companies with mobile workers should review their mobility populations, both inbound into the United States and outbound, and evaluate how such relief impacts their expected equalization costs and payroll obligations.  In addition, USTB and PE determinations due to the physical presence of employees within the United States should be evaluated.

Contact us

Doug McHoney

International Tax Services Co-Leader, PwC US

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