Disaster Relief and Temporary Telework: State Tax Guidance

When a hurricane, wildfire, pandemic, or other disaster forces employees to work from locations outside their normal state, state tax obligations can shift abruptly. Some states issue disaster-related tax relief that temporarily suspends normal nexus and withholding rules, while others do not. The COVID-19 pandemic produced the broadest telework tax relief in U.S. history, but most of that relief has expired. Understanding the landscape of disaster tax relief — and its limits — is essential for employers and employees who may be affected by future disasters.

This article explains when states issue disaster-related tax relief, the COVID-19 telework relief and its expiration, the types of relief typically issued, hurricane and wildfire relief examples, the difference between federal and state relief, how to find current relief, documentation for disaster-related telework, the "temporary" telework trap, state-by-state examples, employer preparation for future disasters, and a practical compliance checklist.

When states issue disaster-related tax relief

States issue disaster-related tax relief in two main situations. The first is when a natural disaster — a hurricane, wildfire, flood, or earthquake — affects a geographic area within the state, disrupting normal business operations and tax administration. The second is when a public health emergency or other extraordinary event disrupts normal work arrangements, as occurred during the COVID-19 pandemic. In both situations, state Departments of Revenue (DORs) may extend filing deadlines, abate penalties, or temporarily suspend specific tax rules to accommodate affected taxpayers.

Disaster relief is typically triggered by a federal FEMA disaster declaration, which makes the affected area eligible for federal assistance. State DORs often follow FEMA declarations with their own tax relief notices. The state relief may mirror the federal relief (extended deadlines, penalty abatement) or may go further (temporary suspension of nexus or withholding rules). The scope and duration of state relief vary widely, and taxpayers must verify the specific relief available in each affected state.

The COVID-19 telework relief (2020-2022)

The COVID-19 pandemic produced the broadest and most coordinated disaster-related telework tax relief in U.S. history. Beginning in March 2020, when many states issued stay-at-home orders and large numbers of employees began working from home, state DORs issued guidance addressing the tax implications of temporary telework. The guidance varied by state but typically addressed two issues: whether employer nexus was created by employees temporarily working in the state, and whether convenience-rule taxation applied to employees temporarily working from home in another state.

Several states with convenience rules (including New York, Pennsylvania, and others) issued guidance stating that temporary telework due to COVID-19 would not change the sourcing of employee wages for convenience-rule purposes. The New York guidance was particularly consequential: it provided that wages of a non-resident employee temporarily working outside New York due to COVID-19 would continue to be sourced to New York, preserving New York's taxing claim. Other states, including New Jersey and Connecticut, issued guidance that temporary telework would not create nexus for out-of-state employers whose employees were temporarily working in those states.

Most COVID-19 telework relief has expired. The relief was explicitly temporary, tied to the duration of the public health emergency, and state DORs issued expiration notices as the emergency wound down in 2022 and 2023. As of 2025, normal rules apply in most states, and remote work from another state is treated under each state's standing rules. Employers that have continued remote work arrangements should not assume that COVID-era relief is still in effect and should re-evaluate their multi-state withholding and nexus positions under current rules.

Types of disaster relief typically issued

Disaster-related tax relief takes several forms, each addressing a different compliance challenge. The most common forms are filing deadline extensions, penalty abatement, and (more rarely) temporary suspension of nexus or withholding rules. The breadth of relief depends on the nature of the disaster and the state's administrative and statutory authority.

Extension of filing deadlines

The most common form of disaster relief is an extension of filing and payment deadlines. State DORs typically extend the deadlines for income tax returns, estimated tax payments, and other tax filings for affected taxpayers, often mirroring the federal extensions issued by the IRS. The extensions usually apply for a defined period (such as the duration of the FEMA disaster declaration plus a set number of days) and may apply only to taxpayers in the affected geographic area or to taxpayers nationwide whose records are in the affected area.

Penalty abatement for late payments

States may also abate penalties for late payments or late filings that result from the disaster. Penalty abatement is typically granted on a case-by-case basis, with the taxpayer requesting abatement and explaining the disaster-related cause. Some states grant automatic penalty abatement for affected taxpayers, while others require a specific request. Interest on late payments is typically not abated, even when penalties are, because interest is generally considered compensatory rather than punitive.

Temporary suspension of nexus rules

A temporary suspension of nexus rules is rarer and was a distinctive feature of the COVID-19 telework relief. Under normal rules, an employee working in a state creates employer nexus in that state, triggering registration, withholding, and other compliance obligations. Several states issued guidance during COVID-19 stating that temporary telework by an employee in the state would not create employer nexus, on the theory that the telework was involuntary and temporary. This relief was unusual and should not be assumed to apply to future disasters unless the state explicitly issues it.

Temporary suspension of withholding requirements

Similarly rare is the temporary suspension of withholding requirements. During COVID-19, some states issued guidance allowing employers to continue withholding in the employee's normal work state, even though the employee was temporarily working in another state. This relief simplified payroll administration during the pandemic but was explicitly temporary. As with nexus relief, employers should not assume that similar relief will be available in future disasters unless explicitly granted.

Hurricane relief examples

Hurricane relief is among the most common forms of disaster tax relief. When a hurricane makes landfall and produces widespread damage, FEMA issues disaster declarations for the affected counties, and state DORs follow with tax relief notices. The relief typically extends filing and payment deadlines for affected taxpayers and may include penalty abatement. Two recent examples illustrate the pattern.

Hurricane Helene (2024)

Hurricane Helene made landfall in Florida in September 2024 and produced catastrophic flooding in North Carolina, Tennessee, Georgia, and other southeastern states. FEMA issued disaster declarations for the affected areas. The IRS extended federal tax deadlines for affected taxpayers in the designated counties. State DORs in Florida, Georgia, North Carolina, Tennessee, South Carolina, and Virginia issued their own relief notices, extending state tax deadlines to match or approximate the federal extensions. The relief focused on filing and payment deadlines rather than on nexus or withholding suspension.

Hurricane Milton (2024)

Hurricane Milton made landfall in Florida in October 2024, less than two weeks after Hurricane Helene. FEMA issued additional disaster declarations. The IRS extended federal tax deadlines for affected taxpayers in designated Florida counties. The Florida Department of Revenue issued state-level relief for affected taxpayers, extending state tax filing and payment deadlines. As with Helene, the relief focused on filing and payment extensions rather than on nexus or withholding suspension, reflecting the more limited scope of hurricane relief compared to the COVID-19 telework relief.

Wildfire relief examples

Wildfire relief follows a similar pattern. When wildfires destroy homes and businesses, FEMA issues disaster declarations, and state DORs follow with tax relief. The California wildfires of recent years, the Hawaii Lahaina fire of 2023, and other major wildfire events have produced tax relief for affected taxpayers. The relief typically extends filing and payment deadlines and may include penalty abatement. Wildfire relief has generally not included nexus or withholding suspension, because wildfire-affected employees typically relocate within the same state rather than across state lines.

California wildfire relief

California has issued wildfire-related tax relief on multiple occasions, most recently in response to the major wildfires of 2024 and 2025. The California Franchise Tax Board (FTB) and the California Department of Tax and Fee Administration (CDTFA) have extended filing and payment deadlines for affected taxpayers. The California relief typically mirrors the federal extensions, with affected taxpayers receiving additional time to file returns and remit tax payments. The relief has not generally addressed nexus or withholding issues, because wildfire displacement in California has typically been within the state.

Hawaii Lahaina fire (2023)

The Lahaina fire in August 2023 destroyed much of the town of Lahaina on Maui, killing more than 100 people and displacing thousands. FEMA issued a major disaster declaration. The IRS extended federal tax deadlines for affected taxpayers. The Hawaii Department of Taxation issued state-level relief, extending state tax filing and payment deadlines for affected taxpayers on Maui. The relief focused on filing and payment extensions, not on nexus or withholding issues.

The difference between federal and state disaster relief

A common point of confusion is the relationship between federal and state disaster relief. Federal relief, issued by the IRS, applies to federal tax obligations — federal income tax, federal payroll tax, and federal excise tax. State relief, issued by each state's DOR, applies to state tax obligations — state income tax, state payroll tax, state SUI, and state sales and use tax. The two are separate, and one does not automatically imply the other.

Some states automatically conform to federal disaster extensions, meaning that the state deadline is extended whenever the federal deadline is extended for the same disaster. Other states require their own separate relief action, and a federal extension does not bind the state. Taxpayers must check both the federal relief (on the IRS Disaster Relief page) and the state relief (on the relevant state DOR's website) to confirm the applicable deadlines. Relying on the federal extension without confirming state conformity can result in missed state deadlines and penalties.

How to find current disaster relief

Three primary sources provide current disaster relief information. The first is the IRS Disaster Relief page (available on the IRS website), which lists active federal disaster declarations and the corresponding tax relief. The second is the FEMA disaster declarations page, which lists active disaster declarations by state and county. The third is the state DOR's news or press release page, which announces state-specific relief. Employers with employees in multiple states should subscribe to DOR email alerts in each state where they have employees, to receive timely notice of disaster relief.

Several third-party services aggregate disaster relief information, including services from major accounting firms and payroll providers. These services can be useful for staying current, but they should supplement, not replace, direct monitoring of the IRS and state DOR sources. The official sources are authoritative, and reliance on a third-party summary that is out of date can lead to missed deadlines or compliance failures.

Documentation for disaster-related telework

Documentation is essential for defending disaster-related tax positions. Employers should maintain documentation of the disaster declaration, the state relief guidance relied upon, the specific employees affected, the dates of disaster-related telework, and the employer's decision-making process. The documentation should be contemporaneous — created during the disaster period, not reconstructed later — and should be retained for at least seven years to cover potential audit cycles.

For employees, documentation should include the dates and locations of disaster-related telework, the employer's written designation of the telework as disaster-related, and any state guidance citations relied upon. Employees should retain this documentation with their tax records. If the employee's state of residence challenges the sourcing of wages or the credit for taxes paid to another state, the documentation will be essential to support the employee's position. Employers and employees should coordinate to ensure consistent documentation.

The "temporary" telework trap

The "temporary" telework trap is the risk that disaster-related telework, intended to be temporary, becomes permanent without the employer re-evaluating its tax positions. Disaster relief is explicitly temporary and expires on a defined date. When the relief expires, normal rules apply, and continued telework from another state may create nexus, withholding obligations, or convenience-rule tax exposure that did not exist during the relief period.

Employers must monitor the expiration of disaster relief and re-evaluate their withholding and nexus positions when relief ends. For COVID-19 telework relief, the expiration occurred in stages during 2022 and 2023, and many employers that had continued remote work arrangements had to register for withholding in new states, re-evaluate convenience-rule exposure, and adjust their payroll systems. The transition was complex and error-prone, and some employers discovered the expiration only after receiving audit notices or employee complaints about incorrect withholding. The lesson is to track the expiration of disaster relief proactively and to plan for the transition.

State-by-state examples of past disaster relief

Past disaster relief provides a useful guide to the types of relief that may be available in future disasters. The following examples illustrate the range of state responses.

New York COVID telework guidance (expired)

New York's COVID-19 telework guidance, issued by the New York Division of Taxation in 2020, provided that the wages of a non-resident employee who worked remotely outside New York due to COVID-19 would continue to be sourced to New York for convenience-rule purposes. The guidance preserved New York's taxing claim over non-resident employees who would otherwise have escaped New York tax by working from home in another state. The guidance was controversial and was challenged in court, but it was upheld. The guidance expired as the public health emergency ended, and normal convenience-rule rules now apply.

California wildfire relief (varies by disaster)

California has issued wildfire-related tax relief on multiple occasions, with the specific relief varying by disaster. For major wildfires, the California FTB has extended filing and payment deadlines for affected taxpayers, typically mirroring the federal extensions. The relief has not generally addressed nexus or withholding issues, because wildfire displacement has typically been within California. The California wildfire relief illustrates the standard pattern: filing and payment extensions, sometimes penalty abatement, but rarely nexus or withholding relief.

New Jersey Sandy relief (2012)

Hurricane Sandy, which struck the New Jersey coast in October 2012, produced widespread damage and triggered FEMA disaster declarations. The New Jersey Division of Taxation issued tax relief for affected taxpayers, extending state tax filing and payment deadlines. The relief focused on filing and payment extensions and did not address nexus or withholding issues. The Sandy relief is an example of the standard hurricane-relief pattern, similar to the more recent Helene and Milton relief.

Hurricane Katrina Gulf Coast relief (2005)

Hurricane Katrina, which struck the Gulf Coast in August 2005, produced catastrophic damage in Louisiana, Mississippi, and Alabama. FEMA issued disaster declarations covering large portions of the three states. The IRS extended federal tax deadlines for affected taxpayers. State DORs in Louisiana, Mississippi, and Alabama issued state-level relief, extending state tax deadlines and providing penalty abatement. The Katrina relief was among the most extensive disaster tax relief packages before COVID-19, but it focused on filing and payment extensions rather than on nexus or withholding suspension.

How employers should prepare for future disasters

Employers can take several steps to prepare for future disaster-related tax compliance challenges. The first is to maintain a current map of where each employee lives and works, so that when a disaster affects a particular area, the employer can quickly identify affected employees. The second is to have a written telework policy that anticipates disaster scenarios, including which employees may telework, from which locations, and for how long. The policy should include procedures for documenting disaster-related telework decisions and for re-evaluating tax positions when relief expires.

The third step is to subscribe to state DOR alerts in each state where the employer has employees, so that disaster relief notices are received promptly. The fourth step is to maintain a relationship with a tax advisor or payroll provider that can quickly analyze disaster relief notices and advise on the implications for the employer's specific situation. The fifth step is to document disaster-related telework decisions contemporaneously, including the specific relief relied upon, the affected employees, and the dates of disaster-related telework. The documentation will be essential for audit defense.

Practical checklist for disaster tax compliance

The following checklist summarizes the key steps for disaster tax compliance. (1) Identify affected employees based on location and the disaster declaration. (2) Confirm the federal disaster declaration on the FEMA website and the corresponding IRS tax relief on the IRS Disaster Relief page. (3) Check each applicable state DOR for state-specific relief notices, confirming whether the state conforms to the federal extension or has issued its own. (4) Document the disaster-related telework decisions, including the specific relief relied upon and the affected employees and dates. (5) Adjust filing and payment deadlines in the payroll and tax systems to reflect the extended deadlines. (6) Re-evaluate nexus and withholding positions when the relief expires, registering for withholding in new states if necessary. (7) Communicate with affected employees about the tax implications of disaster-related telework, including any changes in withholding or in their state filing obligations.

What to do next

If you are an employer, take three steps now to prepare for future disaster tax compliance. First, build a current map of where each employee lives and works, and subscribe to state DOR alerts in each state where you have employees. Second, adopt a written telework policy that anticipates disaster scenarios and includes documentation procedures. Third, identify a tax advisor or payroll provider who can quickly analyze disaster relief notices when they are issued. Run our multi-state withholding calculator to model the tax implications of disaster-related telework, and consult a licensed tax professional for your specific situation, particularly if you have employees who have been displaced by a recent disaster.