State and local taxes impact almost every taxpayer, and developments in any one jurisdiction can be frequent and sometimes confusing. In this newsletter edition, we will briefly summarize certain SALT developments in several states which may be important to you.
Alabama – Updates Reported
Proposed Guidance on SALT Cap Workaround: Alabama is among a number of states that have legislated a workaround of the state and local tax (SALT) cap contained in the 2017 federal tax act for pass-through business entities. The Alabama Department of Revenue (Department) has proposed guidance for the Alabama SALT cap workaround, Proposed Regulation 810-3-36-.01, Electing Pass-Through Entity Returns. The Department has scheduled the Proposed Regulation for a public hearing in early October. The Proposed Regulation provides, among many other things, that eligible S Corporations and Subchapter K Entities, a “Pass-Through Entity,” may electronically elect the workaround by filing Form PTE-E, Pass-Through Entity Election Form, on or before the fifteenth day of the third month following the close of the tax year for which the election is to be effective. The election is binding for the year it becomes effective and all subsequent tax years, until revoked by the taxpayer using the same method as electing such treatment. The election is available for taxable years beginning on or after January 1, 2021. The effect of the election is to provide a tax credit, not subject to the SALT cap, as calculated per the prescribed methodology in the Proposed Regulation, to the owners of a Pass-Through Entity, in exchange for an entity-level tax payment. The owners of the Pass-Through Entity, of course, must file an Alabama income tax return to report their pro rata or distributive share of the Pass-Through Entity’s income and claim the tax credit for their pro rata or distributive share of the Alabama income tax paid by the Pass-Through Entity. The election may not eliminate or exempt any owner from the elective treatment. More information can be found here.
District of Columbia – Updates Reported
Homeowners Can Complete Their Real Property Tax Transactions Simpler: On September 1, 2021, the Office of Tax and Revenue (OTR) published a reminder that property tax owners can utilize the MyTax.DC.gov portal to complete their real property tax transactions, including reviewing and paying property tax bills online, applying for tax relief benefits to reduce tax liabilities, and viewing tax assessments for multiple years. The OTR provides in this reminder various contact information in the event that homeowners have questions related to their accounts. More information can be found here.
Florida – Updates Reported
2021 Corporate Income Tax Rate Reduction Confirmed: In our August 2021 edition of this newsletter (here), reference was made to the Florida Department of Revenue (FDOR) addressing the temporary rate reduction for taxable years beginning on or after January 1, 2021 and before January 1, 2022. The anticipated income tax rate was predicted to likely be 3.535 percent for those tax years. The FDOR has just recently issued Tax Information Publication No: 21C01-02 dated September 14, 2021, confirming that the reduced corporate tax rate for those tax years will be 3.535 percent. The FDOR affirms in this Publication that taxpayers having a 52-53 taxable year beginning on or about January 1 and ending on or about December 31 have the same tax rates as a calendar year-end taxpayer. Further, the Publication states that interest and penalties are not imposed on estimated payments if they meet the criteria set forth in the Publication. The FDOR notes in this Publication that for tax years beginning on or after January 1, 2022 the standard rate will revert back to 5.5 percent unless in the meantime FDOR has posted an additional Publication with different future tax rates. More information can be found here.
Georgia – Updates Reported
Revenue Leadership Team: On September 2, 2021, the Georgia Department of Revenue (Department) announced an innovative leadership team at the Department to address functional areas of Tax Operations, Agency Operations and Governance & Planning. This leadership team is comprised of the Deputy State Revenue Commissioner and two Assistant Deputy Commissioners. The objective of these new functional areas within the Department is to streamline services for taxpayers, and this new leadership team will apparently be responsible for achieving that objective. More information can be found here.
Louisiana – Updates Reported
Extensions Granted for Eligible Individuals/Businesses Impacted By Hurricane Ida: On September 7, 2021, the Louisiana Department of Revenue (Department) issued Revenue Information Bulletin No. 21-024 announcing automatic extensions granted as a result of those impacted by Hurricane Ida. According to this Bulletin, eligible taxpayers include individuals and businesses whose homes, principal places of business, critical tax records, or paid tax preparers are located in one of the 25 parishes identified in the Bulletin. According to the Bulletin, automatic extensions are based on the taxpayers’ location address on file with the Department; however, if the taxpayers’ location address is not within one of the parishes listed in the Bulletin, the taxpayer may still be eligible for interest and penalty relief even though an automatic extension did not apply. As noted in the Bulletin, extensions do not apply for any tax that was due before August 26, 2021. The extensions provided by the Department in this Bulletin include individual income, corporation income and franchise, fiduciary income, partnership, and partnership composite tax returns with the original or extended due dates on or after August 26, 2021 and before January 3, 2022, with the extension due date to file the return being January 3, 2022. The Bulletin also addresses extensions that may be applicable with respect to the estimated income tax payments, withholding tax returns, and severance and excise tax returns. The Department sets forth various criteria in this Bulletin required to be eligible for these extensions. More information can be found here.
Maryland – Updates Reported
Statewide Tax Relief to Businesses: On September 3, 2021, the Comptroller of Maryland issued a News Release that extended tax relief to businesses impacted by severe storms in various parts of the identified counties, as well as other parts of Maryland. According to the Release, the extended due dates for a variety of tax and motor fuel payments for businesses and emergency responders “now applies statewide.” Also, according to the Release, the Comptroller’s Office is providing a waiver of interest and penalties for business taxpayers who are unable to meet the September filing deadlines for sales and use taxes, admission, and amusement taxes, withholding taxes, and certain alcohol taxes, with the Release setting forth the extended date by which the report and payment of such taxes are due. More information can be found here.
Mississippi – Updates Reported
Filing Extensions Due to Hurricane Ida: On September 10, 2021, the Mississippi Department of Revenue (Department) issued Notice 80-21-003 announcing that the Department will follow the federal extended due date of November 1, 2021 within which to file certain income tax returns for victims of Hurricane Ida. According to the Notice, the extension applies to any individual income tax returns, corporate income and franchise tax returns, partnership tax returns, S corporation tax returns, and quarterly estimated payments that were originally due between August 28, 2021 and November 1, 2021. The Notice further states that taxpayers that have a valid extension to file their 2020 tax returns will now have until November 1, 2021 to file their returns. The Notice did state, however, that the federal extension does not apply to the payments for these returns because tax payments were due on the original due date. Also as referenced in the Notice, the Department automatically provides the extension relief for the postponed period; and, as a result, taxpayers do not need to contact the Department to get this relief. The Notice cautioned, however, that the extension does not apply to any other tax types or payments on prior liabilities. Contact information is provided in the Notice in the event that a disaster area taxpayer receives a penalty notice from the Department. Additionally, the Department references in the Notice that it will work with any taxpayer who resides elsewhere but whose books, records or tax professionals are located in the disaster area. More information can be found here.
South Carolina – Updates Reported
Extended Tax Relief for Nexus and Income Tax Withholding Requirements: On August 25, 2021, the South Carolina Department of Revenue (Department) issued SC Information Letter #21-22 which provides a further extension through December 31, 2021 of the previously announced temporary relief regarding a business’s establishment of nexus (income and sales) solely because an employee is temporarily working in a different work location due to COVID-19. Further, that Information Letter #21-22 also provides that the previous announced guidance with respect to employer withholding requirements for these employees has also been extended through December 31, 2021. One of the Department’s initial announcements of this temporary relief can be found in our March 2020 newsletter (here). More information can be found here.
Tennessee – Updates Reported
Packaging of Multiple Products/Services for Sales Tax Purposes: In September 2021, the Tennessee Department of Revenue (Department) published Notice #21-17 providing for an extension upon request of the filing and payment deadlines to January 3, 2022 for those individuals and businesses located in a disaster area designated by the Federal Emergency Management Agency with respect to franchise and excise taxes and the Hall income tax. According to this Notice, the foregoing currently includes those individuals who reside in or have a business in Dickson, Hickman, Houston, and Humphreys counties. The Notice also stated that taxpayers located in areas later designated as a disaster area will also be eligible for this same filing and payment extension. Further, the Notice specifies that this tax relief postpones the franchise and excise tax and Hall income tax filing and payment deadline that occur on or after August 21, 2021, and before January 3, 2022; and that affected businesses and individuals will have until January 3, 2022 to file returns and make payments (including quarterly estimated payments) originally due during this period. The Notice further states that this extension will be granted upon request, and the Department will apply these extensions to those taxpayers who request an extension and have an address in the designated disaster areas. Penalties and interest according to the Notice will not be applied to returns filed and payments made on or before this extended due date. Extensions will also be granted if the returns are prepared by a practitioner located in the designated disaster area who is unable to file the returns or make payments for clients due to the flooding and severe storms; and that those affected tax professionals should contact the Department. Extension requests should include, according to the Notice, the business name, entity ID or Tennessee account number, business location, and a brief description of the loss. More information can be found here.
Texas – Updates Reported
Disaster Relief Information: The Comptroller’s Office recently announced that, in response to Governor Abbott’s disaster declaration regarding Tropical Storm Nicholas, taxpayers in declared counties that are affected by the severe weather and flooding may request a thirty-day extension for sales and use tax reports otherwise due on September 20, 2021. The affected counties are set forth in the announcement, and taxpayers affected by that severe weather may be eligible for an extension of time to file and pay the taxes due; however, the extensions are available upon request only. The announcement then provides the type of information that needs to be provided with the extension request and provides a contact number at the Comptroller’s Office if assistance is needed. More information can be found here.
