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
Extension to May 17: On March 18, 2021, the Alabama Department of Revenue (Department) issued guidance with respect to the income tax filing deadlines in light of the IRS issuing IR-2021-59, which provided that the federal income tax filing due date for individuals for the 2020 tax year will be automatically extended from April 15, 2021 to May 17, 2021. The Department's guidance stated that Alabama provides an automatic extension of up to six months to file Alabama income tax returns wherever there is a corresponding federal extension, and that Alabama taxpayers will not need to request an extension to file Alabama returns without a late-filing penalty through the extended federal due date. The guidance then stated that the Department will automatically waive, without request, late-payment penalties for payments remitted by May 17, 2021; however, the Department is not authorized to waive interest, and any interest accruing from April 15 through the actual payment date will be due. In this guidance, the Department encourages taxpayers to make their payments for the 2020 tax year as soon as possible to avoid the accrual of interest beyond April 15. More information can be found here.
Estimated Payment Guidance for Electing PTEs: On April 2, 2021, the Department issued guidance relative to the Alabama Electing Pass-Through Entity Tax Act (Act). The purpose of this Act is to allow Alabama S-Corporations and Subchapter K entities to elect to pay Alabama income tax at the entity level (Electing PTEs). As noted in this guidance, Electing PTEs must notify the Department any time during the tax year but no later than the 15th day of the third month following the close of the tax year for which the entity elects to be taxed as an Electing PTE. Entities making this election, according to the guidance, including those that anticipate making this election for 2021 tax year, may be required to begin making estimated payments on April 15, 2021. The guidance then provides information as to whether, when and how estimated payments should be made by the Electing PTEs. The Departments stated that additional guidance regarding the election process, returns, and related matters will be issued prior to the 2021 filing season. More information can be found here.
District of Columbia – Updates Reported
Extension to May 17, 2021: On March 19, 2021, the District's Office of Tax and Revenue (OTR) posted an announcement extending the deadline to file and pay all income tax returns until May 17, 2021. According to this announcement, the extension applies to all D-20, D-30, D-40, Standalone Schedule H, D-41, D-40B, and D-65 tax filers, and includes combined return filers. The announcement also noted that this extension is automatic and does not require taxpayers to apply. The announcement also noted that taxpayers may continue to request an extension to file their income, partnership and franchise tax returns to October 15, 2021 or November 15, 2021 for combined return filers, and that such extension requests must be made by filing the applicable extension form with OTR by May 17, 2021, and making all required payments for tax year 2020 by that same date. However, the announcement stated that the deadlines to file Forms D-20ES, D-30ES, D-40ES, and D-41ES and to make estimated tax payments remain unchanged, with the first quarter payments due April 15, 2021. Separately, and on March 22, 2021, the OTR issued an announcement regarding certain real property tax and related filing deadline extensions. More information regarding these extensions can be found here and here.
Florida – Updates Reported
Remote Seller/Marketplace Provider Legislation: On April 8, 2021, Senate Bill 50 was passed by the Florida Legislature. That bill constitutes Florida's initiative to impose sales tax requirements upon remote sellers and marketplace providers. Governor DeSantis is expected to sign this legislative initiative that, effective July 1, 2021, will start the process of allowing the Florida Department of Revenue to impose sales tax collection and remittance requirements on remote sellers and marketplace facilitators. This legislative initiative is complex, so we will await the Governor's signature before further reviewing these new tax provisions in our next edition. More information can be found here.
Update On Hillsborough County Sales Tax Rate: On March 16, 2021, the Florida Department of Revenue (Department) issued Tax Information Publication No: 21A01-01 addressing the sales tax rate in Hillsborough County as the result of the Florida Supreme Court ruling that the 1 percent transportation discretionary sales tax adopted in that County was unconstitutional. According to this TIP, the revised rate in that county effective immediately is 7.5 percent; and such rate is composed of the 6 percent state sales tax plus the 0.5 percent school capital outlay surtax, the 0.5 percent indigent care surtax, and the 0.5 percent local government infrastructure surtax. This TIP states that dealers should collect only the combined 7.5 percent rate, and that all tax and surtaxes collected must be reported and remitted to the Department. More information can be found here.
Georgia – Updates Reported
Extension to May 17: On March 19, 2021, the Georgia Department of Revenue (Department) announced, in conformance with the federal extension of the individual income tax return due date, that Georgia is automatically extending the 2020 individual income tax filing and payment deadline from April 15, 2021 to May 17, 2021, without penalties or interest. According to this announcement, this Georgia relief is only for the tax year 2020 individual state income tax payments and state individual income tax returns due on April 15, 2021. Further, individual taxpayers do not need to file forms or call the Department to qualify for this automatic filing and payment extension. Estimated income tax payments due on April 15, 2020 are not included in this extension. Separately, the Department has published various FAQs regarding the 2020 individual income tax filing and payment deadline extension, which can be found here.
Reduction in Individual Income Taxes: On March 22, 2021, Governor Kemp signed legislation passed by the Georgia Legislature increasing the standard deduction for various taxpayers, effective for all taxable years beginning on or after January 1, 2022. More information can be found here.
Unemployment Income Still Taxable: On April 5, 2021, the Department updated its income tax guidance to state that unemployment income remains taxable at the state level and must be included in the taxpayer's income in their Georgia return. The American Rescue Plan Act of 2021, which provides for an exemption at the federal level for certain amounts of unemployment income, was signed into law by President Biden on March 11, 2021. However, Governor Kemp had already signed earlier Georgia legislation updating the state's income tax laws to conform to the Internal Revenue Code as it existed prior to January 1, 2021, so the revisions made by the American Rescue Plan were not included within the confirmation legislation signed by Governor Kemp. As result, Georgia has not yet adopted the tax exemption for any unemployment income. More information can be found here.
Louisiana – Updates Reported
Extensions Provided: On March 18, 2021, the Louisiana Department of Revenue published Revenue Information Bulletin No. 21-007 granting automatic filing and payment extensions to taxpayers located in parishes declared federal disaster areas following the severe winter storms that occurred on February 11 – 19, 2021. Those disaster areas include all 64 parishes in Louisiana. For individual income, corporation income and franchise, fiduciary income, partnership, and partnership composite tax returns and payments with original or extended due dates on or after February 11, 2021, and before June 14, 2021, the automatic extension due date is June 15, 2021. Extensions were also provided through March 31, 2021 for withholding tax returns and payments due on or after February 11, 2021 and before February 28, 2021; and sales, severance, and excise tax returns and payment with original or extended due dates on or after February 11, 2021 and before February 28, 2021 were also extended to March 31, 2021. Other extensions were also referenced in this Revenue Information Bulletin. More information can be found here.
Maryland – Updates Reported
Expanded EIC and New Child Tax Credit: On March 11, 2021, the Comptroller of Maryland published a Tax Alert addressing a certain recently enacted Maryland legislation expanding the Maryland earned income credit (EIC) and providing a new Maryland child tax credit. According to this Alert, and prior to the passage of this recent legislation, Maryland conformed to the federal law codified in Internal Revenue Code Section 32(m) by restricting the Maryland EIC to filers with a social security number; however, this recent Maryland legislation decoupled the state from such requirement and expands eligibility to individuals and joint filers who are otherwise eligible but for the Section 32(m) limitation. Further, this recent Maryland legislation created a refundable credit available to certain individuals and joint married filers with one or more dependent, disabled children under the age of 17. This new credit is available in tax years 2020, 2021, and 2022. The Tax Alert also sets forth a few FAQs discussing these credits. More information regarding the expanded Maryland EIC and new child tax credit can be found here.
Digital Advertising Tax Proposed Amendments/Effective Date Change: Senate Bill 787, as recently passed in the Maryland General Assembly, makes various amendments to the previously enacted tax on digital advertising. Included among these amendments is a change in the effective date to be applicable to all taxable years beginning after December 31, 2021, in comparison to the previous date of December 31, 2020. This Senate Bill 787 will be sent to Governor Hogan for consideration. More information can be found here.
Mississippi – Updates Reported
Extension to May 17: On March 22, 2021, the Mississippi Department of Revenue (Department) issued Notice 80-21-002 stating that Mississippi will follow the federal extension to file the 2020 individual income tax returns from April 15, 2021 to May 17, 2021. The Department's Notice states that the extension only applies to the filing of the individual income tax return and payment of tax due, and that penalty and interest will not accrue on returns filed and payments made on or before May 17, 2021. The Notice also states that the extension does not apply to quarterly estimated payments due April 15, 2021. More information can be found here.
South Carolina – Updates Reported
Extension to May 17: On March 31, 2021, the South Carolina Department of Revenue (Department) issued SCI Information Letter #21-7 addressing the state's conformity with the filing and payment relief provided by Internal Revenue Service Notice 2021-21. In this Information Letter, the Department states that, in response to the tax relief provided by Notice 2021-21, the Department is providing the same tax filing and payment relief granted for individual income tax returns originally due April 15, 2021. The Information Letter goes on to state that taxpayers will have until May 17, 2021 to perform the following: (i) file their 2020 South Carolina individual income tax returns and make income tax payments in connection with those returns originally due April 15, 2021, without penalties and interest (such relief being automatic with no need to file any forms); (ii) make 2020 contributions to the South Carolina College Investment Program and similar contributions as referenced in the Information Letter; and (iii) file a claim for credit or refund of South Carolina individual income tax that was due to be filed on or after April 15 and before May 17, 2021.
Potential Federal Conformity: Also in that same Information Letter #21-7, the Department noted that the South Carolina General Assembly during the 2020 Legislative Session conformed to the Internal Revenue Code as of December 31, 2019, but did not adopt the federal CARES Act nor the subsequent federal legislation known as Taxpayer Certainty and Disaster Tax Relief Act of 2020 and the American Rescue Plan Act of 2021 (which excludes from the federal taxable income the first $10,200 of unemployment compensation for those taxpayers with less than $150,000 in adjusted gross income). The Department stated that the South Carolina General Assembly is currently considering legislation to address this federal legislation, and, if the General Assembly so conforms to such federal legislation, the Department will issue updated guidance. More information can be found here.
Nexus Relief Extended: On April 7, 2021, the Department issued SC Information Letter #21-8 extending the previous nexus relief afforded to businesses because an employee is temporarily working in a different work location due to COVID-19. Originally, this relief was effective from March 13, 2020 through September 30, 2020, and then extended until December 31, 2020, and thereafter further extended until June 30, 2021. Information Letter #20-11 extends that relief through September 30, 2021. More information can be found here and here.
Tennessee – Updates Reported
Extension to May 17: On March 19, 2021, the Tennessee Department of Revenue (Department) published Notice #21-02 stating that, consistent with the IRS's decision to extend the filing deadline for individuals, the Department has extended the due date for filing and paying the 2020 Hall income tax from April 15, 2021 to May 17, 2021. The Hall tax has a zero tax rate for tax years beginning on or after January 1, 2021. The Department also extended the franchise and excise tax due date from April 15, 2021 to May 17, 2021 for individuals who file a Tennessee franchise and excise tax return using Schedule J2 – Computation of Net Earnings for a Single Member LLC Filing as an Individual. These extensions are automatic, and no further action is required per said Notice. The Department did state that interest and late filing penalties will not be applied for those returns filed and payments made on or before this extended due date. Estimated payments due on April 15, 2021 are not included in this extension. More information can be found here.
New Exemption/Revised Credit for Film Industry: Further, and on March 29, 2021, Governor Lee signed legislation, 2021 Public Chapter 70, enacting a new sales/use tax exemption and a revised franchise and excise tax credit for "qualified production" activities – meaning in essence the production of certain films, the creation of certain computer-generated imagery, and stand-alone audio or visual post-production scoring and editing in Tennessee. With respect to the sales tax exemption, the new legislation provides that the sale or use of tangible personal property, computer software, or services that are necessary to and primarily used for qualified production are exempt from the sales/use tax. The applicant for the exemption must apply to the Tennessee Film, Entertainment and Music Commission (Commission) to seek a determination that the applicant is engaged in a qualified production; and, if so determined, the Commissioner of the Department and the Commissioner of the Department of Economic and Community Development (ECD) thereafter must each determine that approving the exemption application is in the best interests of the state. With respect to the restated franchise and excise tax credit, an applicant engaged in qualified production can be awarded a credit for qualified payroll expenses which may be taken on any franchise and excise tax return but not exceeding 50 percent of a combined tax liability shown on that return before the credit is taken. Qualified payroll expenses means compensation paid in Tennessee for a "qualified position" during the applicable tax period, and a qualified position means services performed by an employee or independent contractor determined by the Commission to be necessary to and primarily for a qualified production. Unused credit can be carried forward for not more than 15 years. The applicant must apply to the Commission for purposes of determining whether the applicant is engaging in qualified production; and, if so approved, the Commissioner of each of the Department and ECD must determine that approving the credit application is in the best interests of the state. This legislation is effective July 1, 2021 for the sale/use tax exemption, and effective July 1, 2021 for the franchise and excise tax credit, applying to tax years beginning on or after that date. More information can be found here.
Texas – No Further Update