March 23, 2020
State Tax Update
Posted by COVID-19 Rapid Response Team
The COVID-19 emergency is creating confusion and uncertainty as to whether individuals and businesses are required to file and pay state and local tax obligations.
The information we are receiving is changing daily. We are here to provide you with the latest information on when to file and pay your state and local tax obligations. Below are links to the various state and local websites which will provide you with the taxing authorities’ guidance as to their requirements to comply under the current crisis.
There are numerous business and state tax compliance and planning issues to consider.
Top Questions We’re Seeing
- When are you required to file your state tax returns – have the due dates been and payments been delayed?
- If my business cannot pay the tax, should I file my returns anyway – Will I be penalized for late filing, late payment or both? How do I request an abatement of the penalty?
- If a return is still due, how do I coordinate and file paper-filed returns or returns in states that do not accept electronic signatures?
- What do I do if I have an ongoing audit and owe a response to the auditor?
- Now that my employees are working from home, do I have nexus where they work now? Do I owe the local business license tax and payroll taxes (if applicable) to the local jurisdictions?
- If I have a state grant or incentive that is contingent upon growing or maintaining a work force is that in jeopardy?
- How do I receive relief support offered by my state or local jurisdiction related to COVID-19?
State and local governments are rapidly following the lead of the federal government’s Emergency Declaration on Coronavirus Disease 2019 (COVID-19) by providing relief from tax deadlines to Americans who have been adversely affected by the COVID-19 emergency. Many states have “piggybacked” the federal government’s emergency measures, while other states have adopted their own relief measures. A few states have not changed the dues dates because their legislatures are not in session or able to convene, but they are expected to provide relief.
Specific State Examples
Links to state and local websites and specific examples of relief efforts impacting many of our clients are below:
The FTB is postponing the filing and payment deadlines until July 15 for all individuals and businesses for the following:
- 2019 tax returns
- 2019 tax return payments
- 2020 1st and 2nd quarter estimated payments
- 2020 LLC taxes and fees
- 2020 Non-wage withholding payments
Taxpayers do not need to claim any special treatment or call the FTB to qualify for the relief.
Employers may request up to a 60-day extension to file state payroll reports and/or deposit payroll taxes. A written extension request must be received within 60 days of the date of the original due date.
Property taxes in California are due April 10 for a taxpayer’s second installment payment. California’s chief fiscal officer, Controller Yee has issued a statement explaining “While the California Franchise Tax Board, which I chair, has the legal authority to extend filing and payment deadlines for income taxes, I do not have authority over county property tax collection. However, each county treasurer tax-collector has the power to waive penalties and interest for late payments due to circumstances beyond the taxpayer’s control. It is my expectation that county leaders will consider exercising those powers.”
Keith Knox, Los Angeles County Treasurer and Tax Collector issued the following statement on the County of Los Angeles Treasurer and Tax Collector website. “I understand that this is a very stressful time, especially for those suffering direct effects from this public health crisis, and my office is committed to helping in any way we can. Los Angeles County property owners affected by the COVID-19 virus may have late penalties cancelled if they are unable to pay their property taxes by the April 10 deadline.
We have no authority to extend the April 10 deadline, as outlined by State Law. However, beginning on April 11, the day after property taxes are due, people unable to pay on time for reasons related to COVID-19 may submit a request for penalty cancellation online. The department has set up a special team to process these requests for those who demonstrate they were affected by the outbreak.”
San Francisco Business Taxes: Small businesses no longer need to pre-pay 1st quarter business taxes by April 30th.The payment will be deferred to February 2021 without interest or penalties. This relief applies to businesses with up to $10 million in gross receipts.
The income tax payment deadline has been extended for all Colorado taxpayers by 90 days until July 15, 2020. All income tax returns that were required to be filed by April 15, 2020 are granted a six-month extension and are due on or before October 15, 2020. Penalties have also been waived for estimated payments until July 15, 2020. This is similar to IRS extension, but applies to any income tax payment, regardless of the amount. Unlike the federal government, the state will not impose any caps on the amount of tax that can be deferred.
Governor Jared Polis has directed the Colorado Department of Revenue to “coordinate with local governments that choose to extend tax payment deadlines for property tax, and sales and use tax.”
Small business loans of up to $2 million are available through the Small Business Administration’s Economic Injury Loan program for those taxpayers affected by COVID-19.
The Texas Comptroller has issued the following related to the “taxes that are due are based on sales made in February and collected by businesses on behalf of state and local governments in February, the decision is not to extend or delay the March due dates for state and local sales taxes, hotel taxes, mixed beverage gross receipts and sales taxes, motor vehicle rental tax, seller-financed motor vehicle sales tax and motor fuels taxes.” The Comptroller also encourages taxpayers to use online filing tools to file sales tax and other returns.
The Washington Department of Revenue has closed all offices.
The Department will provide upon request an extension for filing and payment of 60 days for monthly filers and 30 days for quarterly and annual filers.
The Department will not issue tax warrants, notices of withhold and deliver, revocations or new compliance assessments for the next 30 days.
The Department will delay auditing businesses with gross income of less than $5 million for 60 days. Audits in progress are eligible for an extension of up to 60 days and Department staff will be flexible in scheduling audits especially related to social distancing aspects.
The Department will waive penalties for late renewals, however penalties and interest acquired prior to February 29, 2020 will not be waived. Relief can be requested through an email using a My DOR account or by calling customer service.
Seattle: Businesses with less than $5 million of income will receive a deferral of B&O tax collections for businesses impacted by COVID-19. The tax will be due late in 2020.
For other state guidance please see the AICPA’s State Filing Guidance for Coronavirus Pandemic.
We’re Here to Help
We’re closely monitoring the hour-by-hour changes, and we will send out updates as they become available. Reach out to our experts below if you need further information on this topic:
These are unprecedented times. And we know you, your families and your organizations need support, now more than ever. Our top priority as your trusted advisor is to ensure we’re helping you through these tough times. Visit COVID-19 Rapid Response Resource Center for our crisis management resources and contact information for our COVID-19 Rapid Response Team Leaders.