COVID-19 is tragically impacting our health as well as irrevocably altering much of our way of life. Health remains our first priority.

We continue to monitor various state reactions to this pandemic for purposes of understanding short-term tax and tax return responsibilities.

Please take precautions to stay safe.

Due to COVID-19, the Internal Revenue Service (IRS) announced extensions of deadlines to pay various federal taxes and file various federal tax returns, including Notice 2020-18 (March 21, 2020), Notice 2020-20 (March 27), and Notice 2020-23 (April 8). Although some of these extension dates are different, most are automatically granted to July 15, 2020. However, the IRS Notices may not govern tax payment and return filing requirements imposed by states.

This special edition reviews specific updates by several states regarding short-term taxpayer responsibilities as a result of the pandemic.

Alabama – Updates Reported

The Alabama Department of Revenue has announced, pursuant to an ADOR Operational Update as of May 12, 2020, that the Department will not change withholding requirements for businesses based on an employee's temporary telework location within Alabama that is necessitated by the pandemic and related federal or state measures to control the COVID-19 spread. In that regard, the Update stated that the Department will not consider temporary changes in an employee's physical work location during periods in which temporary telework requirements are in place due to the pandemic to impose nexus or alter apportionment income for any business. More information can be found here.

District of Columbia – Updates Reported

On May 26, 2020, the District's Office of Tax and Revenue (OTR) published Notice 2020-06 dealing with the sales taxation of food, drink and alcohol within the District. The OTR states in the Notice that the sales of food, drink and alcohol for consumption on-premises prepared by restaurants, bars and similar establishments are subject to a sales tax rate of 10 percent and that sales of alcoholic beverages for consumption off-premises are subject to a sales tax rate of 10.25 percent. Further, if the sale is made directly by a restaurant (at the restaurant's location, through the restaurant's own website, over the phone or by other electronic means), the restaurant is required to collect sales tax as usual and remit that tax to the OTR.

Still further, marketplace facilitators are required to collect and remit to the District sales tax on sales made on their marketplaces. In the context of restaurants and bars, marketplace facilitators can take orders from customers for delivery or pick-up at a restaurant and collect payment directly from the customers. Those marketplace facilitators are required to collect sales tax from customers at the proper rate and remit such sales tax to the OTR.

The Notice also sets forth various key points. For instance, the Notice states where a restaurant has reported sales at the incorrect rate, the restaurant may file an amended sales tax return to report any increase or decrease in the tax due. More information can be found here.

Florida – Updates Reported

By Tax Information Publication No.: 20B07-02, issued May 21, 2020, the Florida Department of Revenue published the tax rates for production of gas and sulfur effective July 1, 2020. According to this Publication, the adjusted rates must be used when completing the Declaration of Estimated Gas and Sulfur Production Form beginning with the July 2020 estimated payment. Also according to that Publication, that Form will be mailed by the Department to all active accounts during the last week of July. More information can be found here.

Georgia – Updates Reported

The Georgia Department of Revenue has continued to update its Coronavirus Tax Relief FAQ's with a policy statement on the effect of employees' relocation due to the COVID-19 pandemic.

When employees work from temporary locations, the issue of what state has the jurisdiction to tax earnings associated with that location frequently arises.

The Georgia Department of Revenue has announced that it will not use an employee's relocation that is the direct result of temporary remote work requirements due to the COVID-19 pandemic to establish Georgia nexus or for exceeding the protections provided by PL 86-272 (the long-standing exemption for agents with no authority to bind the principal). The temporary protection extends for periods when: (a) there is an official work from home order issued by a government unit, or (b) pursuant to the order of a physician in relation to the pandemic or due to an actual diagnosis of COVID-19, the employee is working at home, including the subsequent 14-day period to allow for a return to normal work locations.

If an employee who normally works in another state remains in Georgia after the remote work requirements end, the normal rules for determining nexus apply.

In addition, wages paid to a nonresident employee who normally works in Georgia but who is temporarily working in another state due to the COVID-19 emergency are considered Georgia wages and the employer should continue to withhold Georgia income taxes. More information can be found here.

Louisiana – Updates Reported

On May 28, 2020, the Louisiana Legislature passed legislation (S138) providing for sales and use tax collection by marketplace facilitators once they exceed the following economic nexus thresholds: the marketplace facilitator's gross revenue for sales delivered into Louisiana exceeded $100,000 from sales of tangible personal property, products transferred electronically, or services; or the marketplace facilitator sold for delivery into Louisiana tangible personal property, products transferred electronically, or services in 200 or more separate transactions. Once signed by the Governor, S138 will take effect July 1, 2020. (L. 2020, S138, effective 07/01/2020, upon the signature of the Governor.)

Also, by Revenue Information Bulletin No. 20-012, issued May 22, 2020, the Louisiana Department of Revenue stated that it will grant automatic penalty relief to taxpayers under certain conditions with respect to the March and April 2020 sales tax returns and payments that were due April 20 and May 20, 2020. To qualify for the penalty relief according to this Bulletin, the taxpayer must file the March and April 2020 sales tax returns and remit the sales tax and any deficiency interest by June 30, 2020. The Bulletin also states that if a taxpayer is unable to remit the sales tax and any deficiency interest by that date, penalty relief will be granted if a taxpayer submits and enters into an Installment Request for Business Taxes by June 30, 2020. Further, and for the March 2020 sales tax period, the Department stated that it has sent self-assessment bills to taxpayers who have filed a March 2020 sales tax return but did not remit all tax shown as due on that return. Pursuant to this Bulletin, taxpayers are not required to pay the penalties shown on the notice if the tax and interest is remitted by June 30 (or the taxpayer submits and enters into an Installment Request by June 30). More information can be found here.

Lastly, on June 1, 2020 the Louisiana Legislature adopted a resolution suspending the corporate franchise tax responsibility for small businesses beginning July 1, 2020 through June 30, 2021. This suspension applies to businesses subject to the tax that reportedly have up to $500,000 of taxable capital. Also suspended is a first-time initial tax of $110. According to sources, this suspension takes effect immediately without requiring the signature of the Governor, notwithstanding the expected cost to the state being about $6 million. More information not available at present.

Maryland – No Further Updates

Mississippi – Updates Reported

On May 29, 2020, the Mississippi Department of Revenue published guidance on its website regarding the recently created "Mississippi COVID 19 Relief Payment Fund" which is intended to assist Mississippi small businesses impacted during the pandemic. The Department is in the process of determining which businesses will be eligible for payments under this Relief Payment Fund, and the article sets forth some basic guidelines and answers. For instance, the Department states that no action is necessary to receive the $2,000 payment, and that the Department will issue payments to eligible businesses based upon tax returns filed with the Department and other information verified by other Mississippi state agencies. The Department also states in this article that the checks will be issued the week of June 1. More information can be found here.

South Carolina – Updates Reported

The South Carolina Department of Revenue issued Information Letter # 20-11 on May 15, 2020, addressing potential withholding and nexus repercussions from decisions made by employers to allow employees to work remotely from their home or other locations. According to this Information Letter, and effective for the tax relief period from March 13 through September 30, 2020, the Department will not use the temporary change of an employee's work location during the COVID-19 relief period to impose a South Carolina withholding requirement under that State's laws. This relief does not apply to workers whose status changes from temporary to permanent status during this period. With respect to employees temporarily changing work locations to outside South Carolina, the Information Letter states that a South Carolina business's withholding requirements are not affected by the current shift of employees working on the employer's premises in South Carolina to teleworking from outside of that State. Accordingly, the Information Letter further states that wages of nonresident employees temporarily working remotely in another state instead of at their South Carolina business location are still subject to South Carolina withholding. With respect to an out-of-state business with employees temporarily working from a South Carolina location, the Information Letter provides that such out-of-state business is not subject to South Carolina's withholding requirements solely due to the shift of employees working on the employer's location outside of South Carolina to teleworking from within South Carolina. In that regard, the wages of a South Carolina resident employee temporarily working remotely from South Carolina instead of at the normal out-of-state business location are not subject to South Carolina withholding if the employer is withholding income taxes on behalf of the other state. Further, the Information Letter states that the Department will not use changes in an employee's temporary work location due to the remote work requirements during this relief period (that is, March 13 through September 30, 2020) as a basis for establishing nexus or altering apportionment of income. More information can be found here.

Tennessee – Earlier Update Reconfirmed

On May 20, 2020, the Tennessee Department of Revenue issued a news release reconfirming that the Department has extended the due date for filing and paying of the professional privilege tax from June 1 to July 1, 2020. This news release referenced Executive Order No. 24, as issued by Governor Bill Lee, which provided this extension. Further, interest and late filing penalties will not be applied to returns filed and payments made on or before the extended due date. More information can be found here.

Texas – No Further Updates