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We continue to monitor various state actions for purposes of understanding tax and tax return responsibilities during the pandemic.
Due to COVID-19, the Internal Revenue Service announced extensions of deadlines to pay various taxes and file various tax returns, with such extensions generally being through July 15, 2020. Those IRS extensions, followed in whole or in part by many states, were very helpful to taxpayers. While these IRS extensions have now expired, many states continue to adjust their tax and related requirements to address specific objectives such as raising revenues to assist with depleted governmental budgets, providing incentives to support business employers, and to assist taxpayers generally in dealing with the realities of COVID-19.
This special edition reviews certain updates by several states which may be important to taxpayers.
Alabama – Updates Reported
The July 17, 2020 deadline as announced by the Alabama Department of Revenue in its June 9 Order for purposes of obtaining annual registration and renewal of vehicles with respect to the months of March through June 2020, where the county license plate issuing official's office was closed at any time during that period, has now been extended to July 31, 2020. That same July 31 extension also applies to motor vehicle registrations and renewals for vehicles registered pursuant to the International Registration Plan where the official's office was closed any time during that period; and, further, penalties associated with the motor vehicle registration and renewals extended to July 31, 2020 will not be charged until August 3, 2020. More information can be found here.
District of Columbia – No Further Updates
Florida – Updates Reported
The Florida Department of Revenue has placed on its website a publication entitled "Property Tax Oversight COVID-19 Frequently Asked Questions" with the current version being dated July 15, 2020. These FAQs address several questions relating to the payment of property taxes as well as the dispute of such taxes. Just by way of example, in response to the question of whether COVID-19 pandemic affected the assessed value of property, the FAQs state that the county property appraiser assesses the value of each property on January 1 of each tax year, and that "the COVID-19 pandemic has no effect on the assessed value placed on the property as of January 1, 2020." In addition, with respect to those situations where the taxpayer believes the property taxes are too high "due to the onset of COVID-19", the FAQs state that the taxpayer should contact the county property appraiser regarding the Truth in Millage (TRIM) hearings for 2020 property taxes. Virtual TRIM hearings are also addressed in the FAQs. More information can be found here.
Georgia – Updates Reported
Georgia, like most states, allows local governmental entities to piggy-back their local sales taxes onto the State tax. When this is done, the State collects both portions and remits to the local government entity its respective portion. When there is an occasion for a taxpayer to claim a refund, the State Department of Revenue determines the validity of the claim for refund and notifies the local government entity that the refund has been approved. In such instances, the State Department of Revenue deducts the refund from future payments otherwise due the local government entity. In some instances, the local government entity may experience a shortfall in budgeted revenue sufficient to cause disruption.
Georgia House Bill 846, recently passed by the Georgia Legislature and signed by the Governor on June 29, 2020, provides that if an approved refund exceeds a certain amount, the Department of Revenue is required to notify the local government, which then has the option to pay its share, with interest, over a period of time equal to the period covered by the refund. More information can be found here.
Louisiana – Updates Reported
Within the last several days Governor Edwards has signed into law various bills from the 2020 Special Legislative Session. Included among those recently enacted laws are the following: (i) extending the sunset for the research and development tax credit until December 31, 2025 (more information can be found here); (ii) providing for an extension of the State’s Angel Investor Tax Credit Program through June 30, 2023 (more information can be found here); (iii) requiring the Louisiana Department of Revenue to waive penalties and interest for certain taxpayers for tax years 2019 and 2020, provided that the taxpayer meets certain conditions such as the health of the taxpayer or of the tax preparer was impacted by COVID-19 on or after March 11 and on or before July 15, 2020, and provided that this new law does not apply to any tax return filed or any tax payments submitted after November 15, 2020 (more information can be found here); (iv) providing for sales and use tax rebate on the sale of certain fiber-optic cable equipment, which appears to applicable to the winning bidder in the Rural Digital Opportunity Fund Option, and which shall equal 50 percent of the sales/use tax paid by the winning bidder on the fiber-optic cable, together with other applicable conditions (more information can be found here); (v) authorizing various business sectors to participate under certain conditions in the State’s Enterprise Zone Incentive Program and the Quality Jobs Program (more information can be found here and here); and (vi) providing for the suspension of the corporation franchise tax and the initial corporation franchise tax for small business corporations for franchise taxable periods beginning between July 1, 2020 and June 30, 2021, as the definition of "small business corporation" is defined in that new law (more information can be found here). Each of these newly enacted tax and related laws include various conditions and requirements.
Maryland – No Further Updates
Mississippi – Updates Reported
On June 30, 2020 Governor Reeves signed into law H.B. 379, The Mississippi Marketplace Facilitator Act. Under the terms of the Act marketplace facilitators with annual Mississippi sales in excess of $250,000 for any consecutive 12-month period will be required to collect and remit sales tax on sales facilitated for a third party. The Act went into effect on July 1. Details on the Act can be found here. On July 13, 2020 the Mississippi Department of Revenue published Notice 72-20-04 providing registration information for facilitators. That Notice can be found here.
South Carolina – Updates Reported
The South Carolina Department of Revenue on July 6, 2020 issued Information Letter #20-18 announcing a simplified method for businesses to claim a refund of the South Carolina admissions tax. Under the State's laws, an admission tax of 5 percent is paid for the right to enter into or use a place of amusement. The amusement tax return includes the revenue from paid admissions as well as the admissions tax for the month the patron is issued the ticket or is notified that the patron will receive a ticket to attend the event. The return and tax are due to the Department on or before the twentieth day of the following month. However, due to the unprecedented closings of businesses and social distancing measures in place for South Carolina residents because of the pandemic, the Department noted that many spectator sports events and concerts have been cancelled or postponed. The Department also noted that it is likely that refunding pre-event ticket payments due to the pandemic may continue into the summer and fall for many large events. While a monthly admissions tax return could be amended many times as the business continually issues refunds over an extended period of time, the Department announced a temporary but more simplified claim for refund procedure which would allow businesses to file a request no more than once a month for a refund of paid admissions tax as the refunds are issued to ticketholders. Under the simplified approach, a business may file a claim if it has refunded the admissions tax to the ticket purchaser. This simplified procedure applies to admissions tax refunds for events scheduled for March 31 through December 31, 2020 which are impacted by the pandemic and where the business had refunded the ticketholder through December 31, 2020. A claim under this simplified approach must be submitted on Form L-3060, "Admissions Tax Claim for Refund Due to COVID-19" – a copy of which is attached to the Notice. This Form can be submitted by email or regular mail to the address in the Notice, but cannot be submitted more than once per month. Questions regarding this simplified admissions tax refund procedure should be directed to the Department at the telephone number in the Notice. More information can be found here.
Tennessee – Updates Reported
As reported in Supplement #7, the Tennessee General Assembly in its re-convened 2020 Session passed legislation both: (i) amending the filing threshold for out-of-state dealers and (ii) amending the sales threshold for determining sales tax collection responsibilities of a marketplace facilitator. Governor Lee signed this legislation into law as 2020 Public Chapter 759. With respect to the threshold for out-of-state dealers, Public Chapter 759 establishes a $100,000 filing threshold if the dealer engages in the regular or systematic solicitation of consumers in Tennessee through any means and made sales that exceeded that amount during the previous 12-month period. On July 16, 2020 the Tennessee Department of Revenue issued Notice #20-23 addressing this new threshold which becomes effective October 1, 2020 and which requires out-of-state dealers to begin collecting and remitting the tax by the first day of the third calendar month following the month in which this threshold was met. Until October 1, 2020, the current remote seller sales threshold is $500,000 as established in Sales and Use Tax Rule 1320-05-01-.129(2). Notice #20-23 states that for purposes of computing the sales threshold, dealers should include all retail sales, including exempt retail sales, but should exclude sales for resale. With respect to the marketplace facilitators amendment, Public Chapter 759 establishes a $100,000 sales threshold in determining the responsibilities of a facilitator. Also on July 16, the Department issued Notice #20-24 addressing a wide range of issues pertaining to this recent amendment. Further, the Department has issued an extensive list of frequently asked questions both addressing the new amendment to the marketplace facilitators law as well as addressing the interaction of the sales threshold for out-of-state dealers with the marketplace facilitators law. More information can be found here, here and here.
Texas – Updates Reported
Texas has changed sales tax sourcing rules for internet orders effective October 21, 2021. Under the current version of 34 Tex. Admin. Code § 3.334(h)(3)(C), when an order is placed over the internet and the seller fulfills that order at a location that is a place of business in Texas, the sale is considered to be consummated at that place of business where the order is fulfilled and the local sales tax is sourced to that fulfillment location. However, under the Texas Comptroller’s newly-enacted regulation at 34 Tex. Admin. Code § 3.334(b)(5), "[o]rders not received by sales personnel, including orders received by a shopping website or shopping software application … are received at locations that are not places of business of the seller." (underscore added) As a result, under the newly adopted regulations, when an order is placed over an internet website, that order is sourced to the purchaser’s address. This rule does not go into effect until October 21, 2021 in order to give "interested parties an opportunity to seek a legislative change." More information can be found here.