State tax planning in response to economic distress
INSIGHT ARTICLE |
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:
Employees working remotely due to the COVID-19 pandemic may result in income tax consequences to both the employee and the employer.
State and local tax filing and penalty relief guidance in response to COVID-19 has accelerated as deadlines approach.
State and local tax opportunities are available for restaurants for cash flow maximization and support during the pandemic.
State and local tax strategies may alleviate some of the economic consequences of COVID-19 on the manufacturing industry.
Businesses in the technology industry may benefit from a roadmap of cash-flow maximization considerations during the COVID-19 pandemic.
Law firms and professional services businesses are experiencing challenges with the COVID-19 pandemic, creating state and local tax issues.
Immeasurable operational challenges face the industry as some sectors see opportunities while others see risk.
Businesses feeling the economic distress of COVID-19 should consider how to maximize cash flow and stay current with state tax
Widespread availability of credits and economic incentives during the COVID-19 pandemic may help businesses increase cash flow.
Businesses facing unemployment claims or layoffs due to COVID-19 should carefully review a number of considerations.
Federal and state governments and taxing authorities are beginning to offer relief to businesses impacted by COVID-19.
Federal income tax filing and payment relief extension to July 15, 2020 may not apply to all state income tax filings.
Limited sales and use tax filing and payment relief has been included in some of the state and local COVID-19 response guidance.
Proper evaluation can help life sciences companies prevent the undue state tax exposures when launching a new drug.