United States

State taxing authorities address COVID-19 filing and business changes

INSIGHT ARTICLE  | 

This article was originally published on March 20, 2020 and was updated on April 2, 2020.

Almost every state with a personal income tax and most states with a corporate income tax have provided filing and/or payment  relief through legislative and regulatory action or by order of the state’s governor. Based on conformity, many states had  already extended their income tax filing deadlines to the federal filing extension. However, conformity to the Internal Revenue Code does not necessarily mean conformity to filing dates. For more information regarding deadline extensions and federal conformity, please read our alert, State conformity to federal COVID-19 extensions.

We will continue to monitor state developments regarding extensions and are working closely with the AICPA to provide updates as they occur. A more detailed tracking chart is available on the AICPA’s website here. Please note that state guidance continues to evolve, including in states where previous guidance was provided.

The following is a summary of selected state responses in wake of the coronavirus:

California: The California Franchise Tax Board is postponing the filing and payment deadlines for all individuals and business entities until July 15 for:

  • 2019 tax returns
  • 2019 tax return payments
  • 2020 1st and 2nd quarter estimate payments
  • 2020 LLC taxes and fees
  • 2020 Non-wage withholding payments

Connecticut: The Connecticut Department of Revenue Services is extending the filing deadlines for certain annual tax returns due on or after March 15, 2020, and before June 1, 2020, by at least 30 days. The payments associated with these returns are also extended to the corresponding due date in June. The impacted returns and the associated filing dates and payment deadlines are as follows:

  • 2019 Form CT-1065/CT-1120 SI Connecticut Pass-Though Entity Tax Return: Filing date extended to April 15, 2020; payment deadline extended to June 15, 2020
  • 2019 Form CT-990T Connecticut Unrelated Business Income Tax Return: Filing date extended to June 15, 2020; payment deadline extended to June 15, 2020
  • 2019 Form CT-1120 and CT-1120CU Connecticut Corporation Business Return: Filing date extended to June 15, 2020; payment deadline extended to June 15, 2020

Iowa: The Iowa Department of Revenue extended the filing and payment deadlines for income, franchise, and moneys and credits taxes with a due date on or after March 19, 2020, and before July 31, 2020, to July 31, 2020.

Maryland: The Maryland Comptroller released a tax alert extending income tax filing and payments to July 15, 2020.

North Carolina: The North Carolina Department of Revenue will extend the April 15 tax filing deadline to July 15 for individual, corporate, and franchise taxes.

Washington: The Washington Department of Revenue has provided guidance on various filing and payment relief offered.

Takeaways

There is much uncertainty as businesses and governments respond to the numerous and disruptive effects of the COVID-19 pandemic. In light of this uncertainty, state and local taxing authorities are providing guidance related to filing and penalty relief due to coronavirus on an almost daily basis. This relief may be specific to certain taxpayers and certain tax types. Additionally, taxpayers should be aware that many taxing authorities are adjusting their hours and operations schedules to protect both their employees and the public.

As the situation with COVID-19 continues to unfold, states will be monitoring economic impacts and putting into place a wide variety of relief measures, most of which will be targeted at providing cash flow relief to businesses and individuals. Due date extensions like those discussed above provide additional time to pay tax liabilities, and may help near-term cash liquidity and flexibility. In the current environment, it is important to keep abreast of deadline changes, and to determine whether it is better to pay now or take advantage of short-term cash flow relief.

Income tax is not the only state or local tax with recent filing relief. For more information regarding sales tax filing or payment relief, please read our alert State and local sales tax extensions and relief due to COVID-19.

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

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