State tax planning in response to economic distress
Businesses experiencing economic distress as a result of the COVID-19 pandemic are facing difficult decisions. From reductions in capital spending and workforce needs, to inventory stress and shortages in supply chain, careful consideration should be given to how decisions affect your organization’s state tax position.
To better navigate uncertainty and distress at the state and local level, there are a number of questions that organizations should ask if in the midst of rapidly changing organizational norms.
- How are my income, sales tax, and other state and local tax filings and payments affected?
- Are my previously approved state tax incentives at risk?
- Does my increasingly remote workforce affect my state tax obligations?
- What relief are state and local governments offering to small and mid-sized businesses in the middle market?
- How else can we increase my organization’s cash flow?
The state tax insights below aim to provide planning opportunities and guidance to organizations feeling the immediate effects of a distressed economy:
Tax planning opportunities for consideration in light of COVID-19, the resulting economic crisis, and evolving tax laws and regulations.
Looming budget shortfalls coupled with tax-related ballot measures in many states could significantly affect 2021.
Extension of corporate surtax and expanded millionaire’s tax assists New Jersey with significant budget deficit caused by the coronavirus.
The final version of Form 941-X Adjusted Employer’s Quarterly Federal Tax Return or Claim for Refund has been released by the IRS.
The Tennessee Department of Revenue issued guidance on the state’s conformity to section 163(j) of the Internal Revenue Code.
The future of state and local incentives in a post-pandemic economy will be highly influenced by remote workforces – states may act soon.
An executive order was issued directing the deferral of payroll tax payments. Follow up guidance from the Treasury Department is expected.
Eligible businesses that did not receive certain other COVID-19 relief may qualify for grants up to $250,000.
New legislation allows nonprofit employers to pay 50% of their unemployment reimbursing payment obligations to states.
Finalized legislation will evolve but the proposal is a starting point for bipartisan negotiations for a new round of economic relief.