Since it was first reported to the World Health Organization on December 31, 2019, the novel Coronavirus has and continues to wreak havoc on a global scale unseen in our lifetime. The COVID-19 pandemic has decimated global financial markets, upended daily life, and caused mass confusion and uncertainty. In a time of uncertainty, at least one thing remains certain: taxes.

Because the government must continue to operate, it must continue collecting revenue to fund those operations. However, they realize that we are all in this together and have made accommodations to ease the stress people are undoubtedly feeling in these uncertain times. We have summarized the South Carolina and North Carolina Departments of Revenue and other tax-related responses below.

To learn about the Federal response to COVID-19 as it relates to taxation, read David M. McCallum’s summary here.

South Carolina Department of Revenue Response

On March 17, 2020, Governor Henry McMaster issued Executive Order No. 2020-10, which authorized SC Department of Revenue Director Hartley Powell “to waive or suspend provisions of existing regulations prescribing procedures for conduct of state business if strict compliance with the provisions thereof would in any way prevent, hinder, or delay necessary action in coping with the emergency.” In accordance with Governor McMaster’s Executive Order, the Department issued SC Information Letter #20-4 and SC information Letter #20-8, setting forth tax relief provisions for businesses and individuals affected by the COVID-19 pandemic. The Information Letter provides the following relief:

Extending Time to Claim a Refund

• A taxpayer generally must file a claim for refund within three years from the date a return is filed, or two years from the date the tax was paid, whichever is later. For taxpayers whose refund claim must be filed by a date between April 1, 2020 and July 15, 2020, SC Information Letter #20-8 extends the deadline to file a claim for refund to July 15, 2020.

Extending Tax Filing and Payment Due Date

• Income Taxes
  • The filing and payment deadlines for South Carolina income tax returns and payments originally due between April 1, 2020 and July 15, 2020 are extended to July 15, 2020. This extension also applies to estimated payments due between April 1, 2020 and July 15, 2020.
  • The extension applies to all taxpayers who have an income tax, franchise tax, or corporate license fee filing or payment obligation – i.e. individuals, corporations, partnerships, banks, savings and loan associations, utilities, trusts and estates, and tax-exempt organizations – regardless of whether the taxpayer has a calendar or other fiscal year end.
  • A prior version of Department guidance (SC Information Letter #20-3) provided an extension until June 1, 2020. SC Information Letter #20-4 modified the income tax filing and payment deadlines to conform to the Federal guidance published in IRS Notice 2020-18.

• Other State Taxes
  • Tax filing and payment deadlines falling between April 1, 2020 and June 1, 2020 for state taxes other than income tax (See SC Information Letter #20-3) have been extended to June 1, 2020 for the following taxpayers:
    • Individuals and businesses located in South Carolina who have been impacted by Coronavirus;
    • Taxpayers who have businesses in South Carolina with offices in South Carolina;
    • Taxpayers whose tax records are located in South Carolina; and
    • Taxpayers whose returns are prepared by tax professionals impacted by Coronavirus.

• This relief applies to any taxes administered by or returns filed with the Department, including, but not limited to:
  • Income tax
  • Sales and use tax
  • Admissions tax
  • Motor fuel user fee
  • Withholding taxes
  • State accommodations taxes
  • Beer, wine, and liquor taxes

• This relief does not apply to returns or payments filed with a county or municipality such as the local hospitality tax or local accommodations tax.

• To take advantage of this relief, taxpayers filing by mail must write “CORONAVIRUS” or “COVID-19” at the top of any paper return or mark the “disaster area” check box if provided on the return. Returns filed electronically by impacted taxpayers through MyDORWAY qualify automatically.

• NOTE: The effective due date for South Carolina income tax returns and payments (including estimated payments) originally due April 15, 2020 is now July 15, 2020. This also means that if taxpayers need additional time beyond July 15, 2020, they can request an additional extension of the filing due date to October 15, 2020 if they request the extension by July 15, 2020.

Waiving Penalties and Interest

• The Department will waive penalties and interest due on tax returns and payments related to the filing and payment extensions referenced above.

As developments continue, the Department will update its COVID-19 information page at dor.sc.gov/emergencies.

South Carolina Department of Employment and Workforce Response

Extending Payment Due Date

Employers in South Carolina are required to pay a quarterly Unemployment Insurance Tax (“UIT”) to the SC Department of Employment and Workforce (“SCDEW”) based on the amount of wages they pay their employees. The first quarter payment, covering wages paid between January and March, is generally due April 30th.

SCDEW issued guidance on March 19, 2020 extending the due date for first quarter UIT. According to the guidance, “[t]he deadline to pay first quarter contributions has been extended from April 30, 2020 to June 1, 2020. Important: Employers will still need to submit their wage reports by the April 30, 2020 deadline.”

So, while SCDEW has extended the due date for payment of the UIT to June 1, 2020, employers must continue to meet their filing requirements.

As developments continue, SCDEW will update its COVID-19 information page at dew.sc.gov/covid-hub.

North Carolina Department of Revenue Response

On March, 10, 2020, Governor Roy Cooper issued Executive Order No. 116 declaring a state of emergency in North Carolina, authorizing all state agencies to implement the provisions of the North Carolina Emergency Operations Plan. In accordance with that authorization, Secretary of Revenue Ronald G. Penny has ordered the North Carolina Department of Revenue to provide the following relief:

Extending Tax Filing and Payment Due Date

• Taxpayers will not incur penalties for failing to file returns or pay taxes due with their returns on April 15, 2020, so long as they file and pay the tax by July 15, 2020. Taxpayers may continue to request an extension of the filing due date on or before April 15, 2020.

• NOTE: Although the Department is waiving penalties for filings and payments received by the July 15, 2020 deadline, it does not have the authority to waive interest charges for payments received after April 15, 2020. Under current guidance, if you take advantage of the extended July 15, 2020 payment deadline, you will be charged interest for the period between April 15 and when you pay the tax.

Waiving Other Penalties

• Penalties incurred for failing to meet due dates between March 15, 2020 and July 15, 2020 are waived for the following:
  • Failure to obtain a license (G.S. 105-236(a)(2));
  • Failure to file a return (G.S. 105-236(a)(3));
  • Failure to pay a tax when due (G.S. 105-236(a)(4)); and
  • Failure to meet other informational return requirements (G.S. 105-236(a)(10)).

• To be eligible for the waiver, a taxpayer must obtain the license, file the return or extension application, or pay the tax on or before July 15, 2020.

• Taxpayers do not need to request a penalty waiver to qualify for this relief. However, if a taxpayer receives a proposed assessment of a penalty relieved, the taxpayer should contact the Department by phone at 1-877-252-3052.

• NOTE: This waiver does not apply to interest charges (current rate of 5% per year). State law prevents the Department from waiving any interest, including interest assessed for the underpayment of estimated tax, except in the limited case of interest on taxes imposed prior to or during a period for which a taxpayer has declared bankruptcy under Chapter 7 or 13 of Title 11 of the United States Code.

Additional Relief

• In addition to the relief granted above, the North Carolina Secretary of Revenue may waive or reduce any penalties provided for in Subchapter I of Chapter 105 of the North Carolina General Statutes. Taxpayers seeking waiver of penalties not specifically referenced above should complete Form NC-5500 to request relief.