In response to the COVID-19 pandemic, state and local governments and taxing authorities have been furiously providing guidance on filing extensions mostly focused on personal and corporate income taxes. And although the March compliance deadline for sales and use tax filings is quickly passing, a few states have also begun to issue extensions or other relief for sales and use tax filings and payments.
Sales and use tax filing relief may be targeted to specific taxpayers, such as smaller businesses or businesses in the restaurant industry. A high-level summary of some of the sales and use tax guidance follows below:
Alabama: Payment, but not filing, relief is provided to both small retail businesses, whose monthly retail sales during the previous calendar year averaged $62,500 or less, and taxpayers currently registered with the Alabama Department of Revenue as engaging in NAICS Sector 72 (preparers of meals, snacks and beverages for immediate consumption) business activities who are unable to timely pay their February, March and April 2020 sales tax liabilities.
Illinois: Taxpayers operating eating and drinking establishments and that incurred a total sales tax liability of less than $75,000 in calendar year 2019 are eligible for relief from penalties and interest on late sales tax payments.
Louisiana: Sales tax returns and payments due on March 20, 2020 are extended to May 20, 2020. This is an automatic extension and no extension request is necessary. Delinquency penalties and compromise interest associated with delinquent sales tax remittances will be waived as long as the return and payment are received by the extended due date of May 20, 2020.
Maryland: The Comptroller is extending business tax filings (including sales and use taxes) with due dates during the months of March, April and May 2020 to June 1, 2020. Note that relief for income taxpayers has been further extended to match federal guidance.
Massachusetts: For vendors whose cumulative liability in the 12-month period ending Feb. 29, 2020 is less than $150,000, the sales and use tax returns and payments due during the period beginning March 20, 2020 and ending May 31, 2020, inclusive, shall be suspended. All such returns and payments shall be due on June 20, 2020.
Michigan: The Michigan Department of Treasury is waiving penalty and interest for the late payment of tax or the late filing of the sales and use tax return due on March 20, 2020. The waiver will be effective for a period of 30 days and may be submitted to the department without penalty or interest through April 20, 2020.
Minnesota: The Minnesota Department of Revenue is granting a 30-day sales and use tax grace period for businesses identified in Executive Order 20-04 (businesses required to shut down). Identified businesses with a monthly payment due March 20, 2020, have until April 20 to make that payment. These businesses should still file their return by March 20.
South Carolina: Tax returns and payments (including sales and use tax) due between April 1 and June 1 will now be due June 1, 2020. Penalty and interest will not be charged if filed and paid by June 1, 2020.
Virginia: Businesses impacted by COVID-19 can request to defer the payment of state sales tax due on March 20, 2020, for 30 days. When granted, businesses will be able to file no later than April 20, 2020 with a waiver of any penalties.
As with most COVID-19 tax-related developments, guidance changes frequently. More sales and use tax filing guidance is anticipated in the coming weeks. RSM is working closely with the AICPA to monitor state and local responses for all tax types. A more detailed chart is available on the AICPA’s website.
For more information on the state and local response to COVID-19, please read our article, State taxing authorities address COVID-19 filing and business changes. For more information on the coronavirus, please see RSM’s Coronavirus Resource Center which includes related and frequently updated developments and a link to sign up for RSM’s weekly Coronavirus webcast series.
Lastly, if your business is experiencing cash flow issues as a result of the current economic environment, consider contacting your tax advisors to discuss sales and use tax deferral opportunities.