Alabama – Updates Reported

Guidance Regarding Pass-Through Entity Tax Election: On October 19, 2021, the Alabama Department of Revenue (Department) issued guidance regarding the Alabama Electing Pass-Through Entity Tax Act which allows Alabama S-Corporations and Subchapter K entities to elect to pay Alabama income tax at the entity level. According to this guidance, entities making this election must submit Form PTE-E via My Alabama Taxes (MAT) at myalabamataxes.alabama.gov; and that Form PTE-E is expected to go live in January. Further, this guidance states that to prepare for this new process, all pass-through entities that choose this election must be registered to use MAT and must submit the Form PTE-E through MAT prior to the 15th day of the third month following the close of that tax year for which the entity elects to be treated as an electing pass-through entity. The guidance then sets forth information that is available to sign up for MAT. Further, and with respect to a new entity without a Department taxpayer account, the guidance provides that a new taxpayer/account registration application is required to be completed using MAT, and provides some guidance with respect to such registration process. The guidance also provides contact information if assistance is needed. More information can be found here.

District of Columbia – Updates Reported

Tax Changes Effective October 1, 2021: On September 30, 2021, the Office of Tax and Revenue (OTR) published a reminder regarding tax changes that were enacted in the Fiscal Year 2022 Budget Support Emergency Amendment Act of 2021 (2021 Act). This reminder provides that such changes will take effect October 1, 2021, unless otherwise noted. The reminder lists various sources of income that will be excluded from the computation of the District's gross income, including unemployment insurance benefits provided by the District or any other state, and certain grants identified in the reminder. Further, beginning on January 1, 2022, the individual income tax rates will be determined by the table set forth in the reminder. Additional changes which became effective October 1, 2021 are also reviewed in the reminder even though such changes are not included in the 2021 Act. The reminder provides contact information for the OTR's Customer Service Center in the event of questions. More information can be found here.

Florida – Updates Reported

Sales Tax Exemption for Certain Independent Living Items: On October 18, 2021, the Florida Department of Revenue (Department) issued Tax Information Publication No: 21A01-11 addressing a new sales tax exemption which begins as of January 1, 2022 that will assist in independent living. According to this Publication, the items listed in that Publication are exempt from sales tax when purchased for noncommercial home or personal use. The Publication states that purchases of these items by business, including medical institutions and assisted living facilities, are subject to sales tax. More information can be found here.

Georgia – Updates Reported

Proposed Rule Concerning Implementation/Administration of Life Sciences Manufacturing Job Tax Credit: On October 7, 2021, the Georgia Department of Revenue (Department) issued Notice IT-2021-4 setting forth a proposal to adopt Rule 560-7-8-.67 involving the life sciences manufacturing job tax credit. According to this Notice, the Department will consider the adoption of this Rule at a remote regulation hearing to be held on November 10, 2021, and that all comments regarding such Rule from interested persons and parties must be submitted no later than 10:00 am on November 10, 2021. As noted in this proposed Rule, the life sciences manufacturing job tax credit may be used to offset 100 percent of a medical equipment and supplies manufacturer's and pharmaceutical and medicine manufacturer's Georgia income tax liability derived from operations from within Georgia. The proposed Rule sets forth various definitions, provides information regarding the maximum credit amount, the eligibility of the credit, and the conditions and limitations pertinent to the credit, among other information. According to this proposed Rule, this Rule would be effective on July 1, 2021 and shall be applicable to taxable years beginning on or after January 1, 2021. More information can be found here.

Louisiana – Updates Reported

Penalty Relief for Unpaid Sales Tax Under Payment Plan Due by November 30, 2021: The Louisiana Department of Revenue (Department) previously issued Revenue Information Bulletin No. 21-027 dated September 17, 2021, dealing with the devastation caused by Hurricane Ida. As referenced in that Bulletin, taxpayers in certain parishes were eligible for automatic extensions, by tax type, based upon deadlines set by the Department. The sales tax payment deadline was September 20, 2021; but for eligible taxpayers the August 2021 sales tax period is extended from September 20, 2021 to November 1, 2021 for return filing purposes. The Bulletin also states that the Department will grant an automatic penalty relief to taxpayers located in the eligible parishes for the August 2021 sales tax period under certain conditions; and, in order to qualify for the penalty relief, the taxpayer must file the August 2021 sales tax return and remit the sales tax and any deficiency interest by November 30, 2021. Further, the Bulletin states that if a taxpayer is unable to remit the sales tax and any deficiency interest by November 30, 2021, penalty relief will be granted if the taxpayer submits and enters into an Installment Payment Plan Request for sales taxes due by November 30, 2021. The Bulletin sets forth more information regarding such penalty relief. More information can be found here.

Maryland – Updates Reported

Whistleblower Reward Program Summary and FAQs: On September 30, 2021, the Comptroller of Maryland issued a Tax Alert summarizing the Whistleblower Reward Program operated by the Comptroller and provided several FAQs regarding that Program. This Alert addresses eligibility requirements for a whistleblower, discusses the phrase "original information," reviews what is a "covered enforcement action," and explains the method for a whistleblower to participate in the Program, among other information pertinent to such participation in and the administration of the Program. Further, the Alert provided several frequently asked questions regarding the Program. More information can be found here.

Mississippi – Updates Reported

Proposed Rule Dealing with Sales Tax Treatment of Computer Software: On October 12, 2021, the Mississippi Department of Revenue (Department) filed a Notice with the Mississippi Secretary of State advising of a proposed Rule amendment to clarify the sales tax treatment of computer software sales and services when delivered through cloud computing. According to this Notice, relevant definitions were added; and, additionally, the definition of "computer program" was deleted and included as part of the "computer software" definition. Other provisions are also included. The Notice states that an oral proceeding is scheduled for this proposed Rule on November 3, 2021. More information can be found here.

North Carolina – Updates Reported

Impact of Certain Federal Laws On North Carolina Individual Income Tax: On October 8, 2021, the North Carolina Department of Revenue (Department) issued an Important Notice addressing the question of whether certain federal legislation enacted in late 2020 and early 2021 impacted the computation of the North Carolina individual income tax. In that regard, the Department noted that on December 27, 2020, the federal Consolidated Appropriations Act, 2021 was signed into law, and that March 11, 2021 the federal American Rescue Plan Act of 2021 was also signed into law. The Department noted that those federal laws excluded specific items of income from the federal definition of gross income as of May 1, 2020, such as certain financial assistance to individuals and businesses impacted by COVID-19. The Department also states that the North Carolina General Assembly each year considers whether to adopt the current Internal Revenue Code (Code) to make certain tax definitions and calculations of adjusted gross income consistent between the Code and the North Carolina tax statutes. However, the Department pointed out that even though the General Assembly is still in session, it has not so far enacted the changes to the Code as it was enacted as of March 11, 2021 or later; and, as a result, taxpayers whose federal adjusted gross income excluded items of income that would otherwise be included in taxable income as of May 1, 2020, must add back that excluded income when calculating the North Carolina taxable income unless the General Assembly later adopts those federal exclusions. According to this Notice, examples of excluded income would include the Economic Injury Disaster Loan grants, certain Small Business Association loan payments, and the first $10,200 of 2020 unemployment benefits which are not subject to federal income tax. The Notice then provides a guide as to how to include the federally excluded income in the calculation of the North Carolina taxable income. Additionally, the Notice provides contact information at the Department if taxpayers have questions about this Notice. More information can be found here.

South Carolina – Updates Reported

COVID-Related Distributions Treatment for Income Tax Purposes: On September 28, 2021, the South Carolina Department of Revenue (Department) published Revenue Ruling #21-12 addressing various questions relating to the treatment of COVID-related distribution under the South Carolina income tax. The Department initially noted that Section 2202 of the Federal Coronavirus Aid, Relief, and Economic Security Act of 2020 (CARES Act) provided that COVID-related distributions from eligible retirement plans are not subject to the 10% additional federal tax generally imposed on early distributions under Internal Revenue Code Section 72(t). The Department noted that since South Carolina has not adopted Section 72(t) of the Code, then South Carolina would not impose a penalty for such premature distributions; and, accordingly, for South Carolina income tax purposes the same tax treatment is provided for COVID-related distributions from eligible retirement plans under the CARES Act as to federal tax treatment. Separately, the Department noted that South Carolina provides an annual deduction for taxable income for retirement income to the original owner of a qualified retirement account, and that the qualifying taxpayer receiving retirement income may deduct up to $3,000 of such retirement income annually through age 64, and deduct up to $10,000 of such retirement income annually at age 65 and thereafter. The Department reasoned that since the term "retirement income" under South Carolina law means the total of otherwise taxable income not subject to a penalty for premature distribution, and since Section 72(t) of the Code provides that COVID-related distributions from eligible retirement plans are not subject to early withdrawal penalty under the Code, a COVID-related distribution from a qualified retirement plan meeting the requirements of South Carolina law for deduction purposes is allowed the South Carolina retirement income deduction. Additionally, the Department concluded that COVID-related distributions that are later repaid to the eligible plan will lower the federal taxable income and the South Carolina taxable income for the years that previously included the distribution in income (tax years 2020 and 2021); and that repayment of such previously included income is, in effect, treated as never distributed. More information can be found here.

Tennessee – Updates Reported

Online Advertising Platform and Data Processing Service Not Sales/Use Taxable: The Tennessee Department of Revenue (Department) has recently posted Letter Ruling #21-08 addressing the question of whether the sales use tax applies to a certain online advertising platform and data processing service. The taxpayer in this Ruling operates an online cloud-based platform for use by brokers and carriers engaged in the business of commercial freight transportation so as to arrange for transportation of freight. Two different offerings were provided by the taxpayer to brokers and carriers, and access to the offerings were exclusively through the platform where subscribers paid either a monthly subscription fee or a one-time access fee depending upon the level of access. The purpose of the first offering is essentially to provide advertising where a broker uploads posting to the platform for hauling opportunities and the carrier identifies a posting for a desired job and utilizes the contact information so as to contact the broker. The carrier uses its own telecommunications services to confirm the transaction, and the platform does not provide any sort of messaging system or other means of facilitating communications between the broker and the carrier. The Department concluded that the first offering was not subject to the sales and use tax, reasoning that the offering does not come within the definition of a telecommunications service nor is it otherwise included in an enumerated taxable service, nor does the taxpayer sell or license software to the subscriber in connection with such offering. The taxpayer's second offering assists brokers and carriers in determining the fair market value of a particular route or hauling engagement, where the subscribers contribute rate data from confirmed engagements on a voluntary basis by sending the information to the taxpayer once a rate agreement was in place. The platform then processes the data based on key market areas, and protects the data so that this offering could not be used to identify a particular subscriber that contributed the data. The information in this offering could be viewed via remote access to the platform, and subscribers could either purchase a subscription or a pay a one-time access fee. The Department determined that this second offering is not taxable since data processing and information services are not considered taxable telecommunications services when the purchaser's primary purpose for the underlying transaction is to process data or information. Further, even though this second offering involves remote access to the platform, the access is for the purpose of viewing the processed rate data; and that information or data processing services and the storage of data are nontaxable for Tennessee purposes. More information can be found here.

Sales and Use Tax Customer Refund Procedure: In September 2021, the Department published Notice #21-18 addressing a new customer refund procedure. Tennessee law generally requires a customer who has erroneously paid sales or use tax to a dealer to request a refund directly from that dealer. However, effective October 1, 2021, a new Tennessee law establishes a process by which a customer can file a claim for refund directly with the Department in limited instances when the dealer is unresponsive or declines to credit or refund the tax collected in error. This Notice provides a summary of those limited instances in which a customer may file a claim for a refund directly with the Department. More information can be found here.

Texas – Updates Reported

Local Sales Tax Provisions Effective October 1, 2021: The Comptroller's Office has published information regarding Rule 3.334, Local Sales and Use Taxes, which became effective May 31, 2020. This Rule implements provisions related to the Wayfair decision, marketplace providers and single local use tax rate for remote sellers, and provides guidance on determining the place of business of a seller. As referenced in this guidance, the Rule requires both remote sellers and marketplace providers to collect local tax based on the destination location. This Rule provides a hierarchy for determining where a local sale is "consummated," which includes an evaluation of whether an order is received at a place of business of the seller in Texas, and whether an order is fulfilled from a place of business of the seller in Texas. According to this guidance, this evaluation may result in local tax being due in the local jurisdiction where the order is received, in the local jurisdiction where the order is fulfilled, or the local jurisdiction where the order is delivered. This Rule also provides guidance regarding the location where an order is received. Two of these provisions are effective as of October 1, 2021: (i) an order received by a salesperson while traveling will be treated as being received at the location from which the salesperson operates if the location independently meets the definition of a place of business; and (ii) an order not received by a salesperson, such as an order received by a shopping website or shopping application, is received at a location that is not a place of business of the seller. Also, according to this announcement, and pursuant to an agreed temporary injunction, the second of these provisions is not being enforced while the validity of such provision is being challenged in court; however, the temporary injunction does not change the effective date of the Rule. More information can be found here.