Bloomberg Law Quotes Clark Armitage on H-IB Workers

U.S. businesses risk hefty tax bills as thousands of their H-1B workers remain stranded in India because of months-long visa interview delays, complicating remote work options.

The State Department rescheduled the workers’ visa interview appointments after abruptly imposing extensive new social media screening policies, delaying the US return of people who traveled to India to visit relatives.

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“India is generally assertive in identifying PEs and making corresponding adjustments,” said Clark Armitage, international tax attorney at Caplin & Drysdale. “Any time a US company has employees working for it in India, a PE risk exists and should be evaluated.”

Companies with H-1B workers abroad could argue no PE exists, or choose to terminate or suspend employees to make sure there’s no issue with tax authorities, he said. They can also preemptively assert a PE exists, and then claim a US foreign tax credit—although that would be administratively costly—or have the worker transferred to an Indian subsidiary if one exists.

“Whatever choice the company makes, it likely will want to consult with an Indian adviser about the risks and likely outcomes,” Armitage said.

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