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
Sales Tax Account Renewals: The Alabama Department of Revenue (Department) issued an announcement reminding taxpayers that Administrative Rule 810-6-5-.01.01 requires annual renewals of the following tax account licenses: sales tax, rental tax, sellers use tax, lodging tax, utility gross receipts tax, and simplified sellers use tax. The Department stated that the renewal process must be completed on an annual basis in order to generate a new tax license for the upcoming year. The business information must be verified and updated as necessary on an annual basis each November-December. A link to renew the tax account license is set forth in the announcement. More information can be found here.
District of Columbia – Updates Reported
Annual Tax Preparer Seminar to Be Held January 13, 2022: In late November 2021, the Office of Tax and Revenue (OTR) published an announcement that the Tax Practitioners Institute will be held on January 13, 2022 and will provide tax preparers with a comprehensive presentation and an advanced look at what is new for the tax-filing season and for the new tax year. The OTR advised that the seminar is free, but registration is required. Registered preparers will receive an email in advance of the seminar, which will include a link to use to join the seminar on January 13, 2022. More information can be found here.
Florida – Updates Reported
Peer-to-Peer Car-Sharing Programs Required to Register and Collect/Remit Sales Tax: On December 21, 2021, the Florida Department of Revenue (Department) issued Tax Information Publication (TIP) No: 21A01-14 which provides that, beginning January 1, 2022, when a motor vehicle is rented through a peer-to-peer car-sharing program, the peer-to-peer car-sharing program must collect and remit the applicable tax and rental surcharge due in connection with the rental. The TIP defines a peer-to-peer car-sharing program as, "a business platform that enables peer-to-peer car sharing by connecting motor vehicle owners with drivers for financial consideration." The TIP states that a peer-to-peer car-sharing program is required to register to collect sales tax, discretionary sales surtax and the rental car surcharge applicable to motor vehicles rented through the peer-to-peer car-sharing program. The peer-to-peer car-sharing program is also required to submit a registration application for each county in which the business is located. More information can be found here.
Georgia – Updates Reported
Georgia Film Tax Credit – Examples of Vendors Not Qualifying: On December 20, 2021, the Georgia Department of Revenue (Department) issued Informational Bulletin CRED-2013-2-13, revised December 20, 2021, which provides examples of vendors that do not qualify as a Georgia vendor under Revenue Regulation 560-7-8-.45. In this Informational Bulletin, the Department initially reviewed the pertinent parts of Revenue Regulation 560-7-8-.45 and then addressed the issue of a vendor not qualifying as a Georgia vendor under four different examples. In each of these examples, the company is assumed to have a physical location in Georgia with at least one individual working at such location on a regular basis. However, the facts in each example result in the company not being considered as a Georgia vendor for various reasons, such as the company not regularly holding in inventory more than a de minimis amount of inventory of the type ordered by the production company. Separately, the Bulletin also addresses the Georgia real property exception to the Georgia vendor requirements. More information can be found here.
Louisiana – Updates Reported
Fresh Start Proper Worker Classification Program Delayed: The Louisiana Department of Revenue (Department) recently issued Revenue Information Bulletin No. 21-031 dealing with the implementation of the Fresh Start Proper Worker Classification Initiative (Fresh Start Program). According to this Bulletin, the Fresh Start Program allows employers who have been misclassifying a class or classes of workers as independent contractors to reclassify those workers and voluntarily disclose such reclassification to the Department and to the Louisiana Workforce Commission (Commission) without liability for prior periods. Under the Fresh Start Program, the employer agrees to treat the reclassified as workers on a prospective basis and in exchange is not held liable for any withholding tax, unemployment tax, interest or penalties for prior periods. Although the Fresh Start Program was scheduled to begin January 1, 2022, the Commission adopted an emergency rule in November 2021 to delay the implementation of certain statutory provisions that provide relief associated with the Fresh Start Program. Accordingly, the Fresh Start Program will be delayed while that emergency rule remains in effect. More information can be found here.
Maryland – Updates Reported
Notification to Employees of Potential EITC Eligibility: The Comptroller of Maryland has issued Tax Alert 21-10 which references Maryland law requiring employers to provide, on or before December 31, 2021, electronic or written notice to employees who may be eligible for the federal and Maryland Earned Income Tax Credit (EITC). The Tax Alert states that employees may be entitled to claim the EITC on their 2021 federal and Maryland resident income tax returns if both their federal adjusted gross income and their earned income is less than those figures set forth in the Tax Alert. Further, employees who meet this income eligibility should be advised to go to the Internal Revenue Service website or contact their tax advisor to determine if they meet the other federal criteria. In addition, employees who are eligible for the federal credit are eligible for the Maryland credit. With respect to the Maryland EITC, this credit is for taxpayers who have income and have worked, that such credit reduces the amount of Maryland tax that the employee may owe, and that such Maryland credit is up to one-half of the federal credit. Maryland eligibility conditions are also addressed. More information can be found here.
Mississippi – Updates Reported
Income Tax Credit for Qualifying Charitable/Foster Care Organizations: The Mississippi Department of Revenue (Department) has recently updated Income Tax Technical Bulletin TB 80-501-21-2, dealing with the income tax credit available for voluntary cash contributions to a qualifying charitable organization or a qualifying foster care charitable organization. As referenced in that Bulletin, the tax credit may be carried forward for five years, and the aggregate amount of credits that may be awarded shall not exceed $1 million, together with other required conditions. Separately, the Department has published Notice 80-21-02 entitled Children's Promise Act Notice – 2022 pertaining to the credit authorized for businesses that donate to an Eligible Charitable Organization or an Educational Services Charitable Organization. More information regarding the referenced credits can be found here and here.
North Carolina – Updates Reported
Application Process for Business Recovery Grants: On December 16, 2021, the North Carolina Department of Revenue (Department) announced the Department will begin accepting applications for Business Recovery Grants on December 16, 2021. The Business Recovery Grant Program, according to this announcement, will issue a one-time payment to eligible North Carolina businesses that experienced significant economic loss during COVID-19. The application period closes January 31, 2022 and the Department will administer the Program. There are two types of grants that will be available to eligible businesses that suffered an economic loss of at least 20 percent during the pandemic: (i) a hospitality grant will be available to eligible arts, entertainment, or recreation business, as well as an eligible accommodation or food service business such as a hotel, restaurant or bar – referencing North American Industry Classification System (NAIC) Code 71 and 72; and (ii) a reimbursement grant will be available to an eligible business not classified in NAICS Code 71 and 72 and that did not receive funding from other relief programs, including the Paycheck Protection Program, COVID-19 Job Retention Grant, and the EIDL Advance. The amount of the grant is a percentage of the economic loss demonstrated by the eligible business or $500,000, whichever is less. Eligible business owners may apply online at www.ncdor.gov. More information can be found here.
South Carolina – Updates Reported
Extended Tax Relief for Nexus and Income Tax Withholding Requirements: On December 21, 2021, the South Carolina Department of Revenue (Department) issued SC Information Letter #21-31, which provides a further extension through March 31, 2022 of the previously issued 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. The Department referenced that this relief was first effective pursuant to Information Letter #20-11, which provided the relief and provided guidance with respect to employee withholding requirements for these employees. The Department announced in Information Letter #21-31 that the relief set forth in Information Letter #20-11 will be so extended through March 31, 2022. More information can be found here.
Tennessee – Updates Reported
Franchise and Excise Tax Return Filing Extension for Tornadoes/Flooding: In December 2021, the Tennessee Department of Revenue (Department) issued Notice #21-19 advising that all taxpayers located in the disaster area designated by the Federal Emergency Management Agency, resulting from the December 2021 severe weather, are granted an extension of time to file the Franchise and Excise Tax Return to May 16, 2022. According to the Notice, this tax relief postpones the franchise and excise tax filing and payment deadlines that occur on or after December 10, 2021 and before May 16, 2022. The affected taxpayers will have until May 16, 2022 to file returns and make payments (including quarterly estimated payments) originally due during this period. The Department will apply these extensions to franchise and excise tax accounts of taxpayers who request an extension and have an address in the designated disaster area. Penalties and interest will not be applied to returns filed and payments made on or before the extended due date. Further, extensions may be granted if a taxpayer return is prepared by a practitioner located in the designated disaster area who is unable to file returns or make payments for clients due to the severe weather. Extension requests should include the business name, entity ID or Tennessee account number, business location, and a brief description of the loss. More information can be found here.
Sales Tax Drop Shipment Rule Repealed: The Department just issued Notice #22-01 stating that effective January 10, 2022, Sales Tax Rule 96 is repealed, such Rule addressing the sales tax implications of drop shipments. More information can be found here.
Texas – Updates Reported
Penalty Waiver Information Updated: The Comptroller's Office has recently published an updated version of the online information entitled Waiver Request for Late Reports and Payments Frequently Asked Questions. In this publication, the Comptroller addresses when penalties are assessed, when interest is assessed, why a penalty is imposed when the taxpayer had a franchise tax extension, what recourse does a taxpayer have if a request for penalty waiver is denied, among other topics. Additionally, for purposes of avoiding a penalty, this publication notes that a successful Electronic Data Interchange report that includes a payment must be received by 2:30 p.m. Central on the bank business day before the due date so funds are in the Comptroller's Office by the due date. More information can be found here.