State Tax COVID-19 Update

Times are changing, but how many more changes and modifications will we continue to see? We'll see...

First, the payment deadline moves to July 15. Then, the IRS and Treasury pushed the tax filing deadline to July 15, which aligned the due dates for filing with the extension of time for payments.

Today, guidance came out to allow filers coping with the novel COVID-19 pandemic more time to prepare tax returns. But, it also removed the caps pertaining to the tax payments, to where we now have unlimited tax payment deferral for individuals and businesses.

• The guidance supersedes and modifies prior guidance giving extra time to pay their taxes.

• That guidance provides for unlimited caps to required payments whereas prior guidance allowed individuals to defer up to $1 million and corporations up to $10 million of tax payments without interest and penalties.

• We still haven't seen guidance directly related to the transition tax under §965 installment payments, which are normally due 4/15. We still believe it's prudent to remit the payment by April 15, 2020. The IRS guidance states that the July 15 date applies to 2019 tax year payments and the first quarter of 2020. That likely means the transition tax under §965 is still due April 15, 2020 since it pertains to the 2017 tax year.

• State updates are coming in daily. We'll continue to update you as we know more.

• Also, with additional bills working through the system, various provisions could perhaps be impactful here. If a 5-year carryback provision becomes law, what could that mean for the transition tax?

Times are changing indeed. More to come.

State and local governments are rapidly following the lead of the federal government's Emergency Declaration on Coronavirus Disease 2019 (COVID-19) by providing relief from tax deadlines to Americans who have been adversely affected by the COVID-19 emergency. Many states have "piggybacked" the federal government's emergency measures, while other states have adopted their own relief measures. A few states have not changed the dues dates because their legislatures are not in session or able to convene, but they are expected to provide relief.

Highlights

The various state tax administrators and officials are monitoring developments pertaining to the Coronavirus (COVID-19) and are issuing guidance. The states are responding in the following ways:

• States are following federal guidance on due dates for filing and payments;
• States are issuing their own guidance; or
• States have not yet adopted emergency relief because their legislatures are unable to convene.

Click here to access the AICPA's State Tax Filing Guidance for the Coronavirus Pandemic. It provides the current filing guidance as well as links to the various states' websites. SOURCE: AICPA Coronavirus Resource Center

State income taxes are not the only taxes being affected and/or addressed as a response to the COVID-19 emergency. Other taxes and fees including both filing deadlines and payment deadlines are impacted as well, including but not limited to:

• Payroll taxes
• Sales taxes
• Excise taxes
• Local taxes
• Property taxes
• Business licenses

Please consult with the taxing authority's website to provide guidance as to when the filing and payment of your tax obligations are due and payable.

We have also encountered issues and questions regarding next steps in audits, protests, notices, etc. as it becomes increasingly difficult to access data or state and local tax departments. Some states have addressed this concern, and some have not. In addition, as states cash concerns grow, if state audits are open, it may be a good time to reach a favorable audit settlement.