The Massachusetts Department of Revenue (the “DOR”) finalized a regulation on October 21, 2020 (the “Regulation”) to address income-sourcing concerns during the COVID-19 pandemic. Pursuant to the Regulation, the DOR will continue to treat as Massachusetts-source income any compensation paid to a nonresident who currently performs services out of state due to the pandemic but, immediately prior to the pandemic, performed such services in Massachusetts. Accordingly, such income will be subject to Massachusetts personal income tax and personal income tax withholding. The Regulation was initially scheduled to remain in effect only until December 31, 2020, but an update issued via emergency regulation on December 8, 2020 extended the Regulation’s effect through 90 days after the end of the Massachusetts COVID-19 state of emergency. The DOR will hold a public hearing on the updates in the emergency regulation on January 20, 2021. This procedural step is necessary to extend the effectiveness of the Regulation beyond three months, pursuant to Mass. Gen. Laws ch. 30A, § 2.

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