Daily Tax Report: State

Tax Executives Urge States to Delay Beyond IRS Deadlines (2)

March 26, 2020, 4:19 PMUpdated: March 26, 2020, 10:35 PM

The Tax Executives Institute urged states and localities to move beyond the IRS’s extended deadlines, while Colorado residents could be losing out on expected tax rebates. Here’s the latest on shifting state tax guidelines, deadlines, and policy to deal with the new coronavirus pandemic. For Wednesday’s coverage click here. Here’s a state-by-state roadmap.

An organization representing corporate tax executives wants state and local authorities to follow the federal government’s lead—and go beyond—by delaying certain filing and payment deadlines, among other forms of relief, as the new coronavirus pandemic forces in-house accountants and lawyers to work remotely.

The IRS has moved filing and payment deadlines to July 15, three months beyond the traditional April 15 tax day. Many states have moved in lockstep, but others require legislative or administrative action.

“If states do not extend the deadline for filing state tax returns, taxpayers will need to correct errors reported on their originally-filed state returns on amended state tax returns,” Katrina Welch, international president of the Tax Executives Institute, wrote in a Wednesday letter. It was addressed to the head of the Federation of Tax Administrators, which represents state and local tax collection agencies.

“Such amendments would consume already strained resources of taxpayers and states,” it said. “TEI thus requests that states automatically extend the deadline for filing state income and franchise tax returns and paying such tax until at least 30 days after the federal income tax filing date.”

Sales and use tax and property tax payment and filing deadlines should be postponed, TEI’s letter continued, while electronic tax payments and electronic signatures should be allowed in all states and localities, and deadlines associated with state and local tax controversies should be delayed as well.

Coloradans May Lose Out on Rebates

The pandemic could wipe out Colorado tax rebates that were previously thought to be coming in the next two fiscal years, a state economist told Bloomberg Tax on Thursday.

Colorado has a unique tax-and-spending limitation amendment, the Taxpayer Bill of Rights. It restricts annual growth in state and local government spending to the rate of inflation plus population increase. Revenue collected in excess of the TABOR limit must be returned to taxpayers unless voters say otherwise. TABOR also requires voter approval for all tax increases. Colorado is the only state with such a measure, which voters amended into the state Constitution in 1992.

The December 2019 economic forecast of the Colorado Legislative Council said excess TABOR revenues were expected to be $304.3 million in the current fiscal year that ends June 30, resulting in taxpayer refunds to be paid in FY 20-21. Revenue was expected to exceed the cap by $367.3 million in FY 2020-21, resulting in a TABOR refund for FY 2021-22, the report said.

Then the virus hit.

The council’s March forecast, released just days after public safety concerns led the state General Assembly to adjourn, was decidedly less optimistic, showing a $750 million drop in anticipated tax revenues for the coming fiscal year, compared with the December forecast. The outlook has worsened sharply in the week since the report came out.

The near-certain implications for TABOR? No refunds coming in FY 20-21 or 22-22, said Kate Watkins, chief economist for the council.

North Dakota Gets in Step with IRS

North Dakota income tax filers have until July 15 to file their income tax return and make payments without penalty or interest, in line with the latest federal deadlines.

Tax Commissioner Ryan Rauschenberger encouraged taxpayers who were able able to file prior to the new deadline to do so and said they did not need to take any additional steps.

“We continue to urge taxpayers to e-file and choose direct deposit or electronic payment to help improve the accuracy, security and timeliness of return and refund processing, or chose to mail their return as soon as they are able,” Rauschenberger said. “However, there are many directly impacted by the Covid-19 crisis and this waiver allows all taxpayers 90 days of relief without fear of penalty or interest.”

Cook County Illinois Eases Filing Dates

Cook County is offering taxpayers compliance relief from several tax programs during the Covid-19 crisis, Toni Preckwinkle, the county board president, announced Thursday.

Preckwinkle said the county, Illinois’s largest and the home of Chicago, would push the filing date to May 1, 2020 for all “home rule taxes” payable during the February and March tax periods. The grace period applies to Cook County’s motor vehicle tax, use tax, alcoholic beverage tax, amusement tax, tobacco tax, motor fuel tax, parking lot and garage tax, firearm and ammunition tax, and hotel accommodations tax.

Utah Invokes Emergency Rule for Extension

The Utah State Tax Commission on Thursday made adjustments to its tax filing and payment deadlines for individuals and businesses in response to the pandemic.

The four-member Commission unanimously approved an emergency rule waiving interest and penalties for late-filed 2019 tax returns and payments of corporations and pass-through entities such as LLCs. Returns must be filed by July 15. By statute, Utah’s individual income tax filing deadline automatically shifted to July 15 when the IRS moved it to that date.

Commission Chair John Valentine said no decision has been made about extending sales tax deadlines. It’s possible the governor would have to call a special session of the Utah Legislature to give the commission the authority to do so, he said.

During the commission meeting, executive director Scott Smith reported that 59% of Commission employees were telecommuting. He said all tax commission call centers are open, and state and federal income tax refunds are being fulfilled quickly.

Florida Extends Sales and Use Tax Deadlines

The Florida Department of Revenue said Thursday that it was extending the due date for sales and use taxes, the state’s largest source of revenue, to offer relief to businesses.

Sales taxes produce $26.2 billion a year and fund over 78% of Florida’s general revenue programs, according to the department’s announcement. They usually are due no later than the 20th day of the month.

Taxpayers adversely affected by Covid-19 now have an April 30 due date for sales and use taxes collected in March. Those who couldn’t meet the March 20 due date will have penalties and interest waived for taxes collected in February if those taxes are reported and remitted by March 31.

Businesses that are continuing normal operations still must file and remit those taxes no later than April 20, according to the emergency order signed by department Executive Director Jim Zingale.

To qualify for the extension, a business must be: closed under state or local government orders, with no taxable sales transactions; experiencing sales tax collections in March 2020 that are less than 75% of those collections in March 2019; registered to file quarterly; or established after March 2019.

The due date for 2019 property tax payments also was extended to April 15 under a separate emergency order issued Thursday by Zingale. That order includes an extension for property tax returns for railroad, railroad terminal, private car and freight line and equipment company property normally due by April 1.

Gov. Ron DeSantis (R) directed the department earlier this month to offer flexibility on tax due dates in response to the crisis.

Michigan Graduated Tax Petition Succumbs

The group pushing for a graduated income tax in Michigan has hung up its clipboards because of the pandemic, and the organizers say they will regroup to push for state constitutional change in 2022.

The Fair Tax Michigan petition wanted to let voters decide this November whether to amend the state’s flat 4.25% income tax with a constitutional amendment. The ballot initiative would have required that individuals making $175,000 or less would have their state income tax reduced, but those making more would have to pay at a higher percentage to produce $1.5 billion in additional revenue for schools and infrastructure. The specifics would have been left up to the Legislature.

The group suspended signature-gathering after Gov. Gretchen Whitmer (D) ordered citizens to shelter at home as the state seeks to slow the spread of the new coronavirus.

Nebraska Easing Signature Requirements

Hoping to ease burdens on taxpayers in response to the Covid-19 crisis, the Nebraska Department of Revenue issued guidance this week waiving certain tax return signature requirements.

The department specified it would “accept as a taxpayer signature, any mark, handwritten or digitally rendered that is, applied with actual or apparent intention to authenticate the filing as being approved and made by the signer.”

—With assistance from Christopher Brown in St. Louis, Jennifer Kay in Miami, Tripp Baltz in Denver and Alex Ebert in Columbus, Ohio.

(Adds section on Utah)

To contact the reporters on this story: Lydia O'Neal in Washington at loneal@bloombergtax.com; Michael J. Bologna in Chicago at mbologna@bloomberglaw.com

To contact the editors responsible for this story: Jeff Harrington at jharrington@bloombergtax.com; David Jolly at djolly@bloombergtax.com

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