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Daily Tax Report: State

Minnesota Temporary Telework Won’t Trigger Tax Presence (4)

April 20, 2020, 5:27 PM; Updated: April 20, 2020, 11:09 PM

Minnesota makes it clear that businesses won’t have economic presence in the state for tax purposes simply because employees are temporarily teleworking there. Missouri, meanwhile, is bracing for new spending cuts, and Pennsylvanians may get a break on local property taxes. Here’s the latest on shifting state tax guidelines, deadlines, and policy to deal with the coronavirus pandemic. For Friday’s coverage click here. Here’s a state-by-state roadmap.

The Minnesota Department of Revenue has clarified that workers forced to temporarily work from home don’t establish nexus, or economic presence, for business tax purposes.

The department updated its business tax guidance website, specifying that the state, “will not seek to establish nexus for any business tax solely because an employee is temporarily working from home due to the COVID-19 pandemic.”

The department also clarified that it doesn’t have the authority to waive any sales or use tax requirements for manufacturers that donate medicine, medical supplies, and other tangible property used to fight the pandemic within the state.

Oklahoma Revenue Woes

A combination of low oil prices and an economic slowdown caused by the pandemic is projected to lead to a more than $1.36 billion revenue hit for Oklahoma next fiscal year.

Oklahoma finance officials informed the state Board of Equalization of the revised revenue predictions for fiscal 2021 during a Monday afternoon meeting.

During that meeting, the board officially declared a revenue failure, a move that will allow Oklahoma to access an additional $302.3 million in funds provided in a budget stabilization bill (SB 199) enacted earlier in April. Gov. Kevin Stitt (R) said the board’s decision means the state’s fiscal 2020 budget is fully funded.

Looking ahead to next fiscal year, which starts July 1, the state now expects to bring in about $6.88 billion, a steep drop from the $8.24 billion in revenue that was expected before the economic downturn. If left unaddressed, it could trigger cuts to state agency budgets.

“I just want Oklahomans to know our budget won’t recover overnight and we’ll have to get creative about how we protect our core services for the long-term,” Stitt said.

Connecticut Shortfall

Connecticut state officials are projecting a $530 million budget deficit for the fiscal year that ends June 30.

That includes an estimated $281.3 million decline in sales tax collections.

The deficit will be addressed by a transfer from the state’s Budget Reserve Fund.

Pennsylvanians May Get Local Property Tax Breaks

Pennsylvania local governments can waive penalties and fees on late property tax payments, so long as they come in by Dec. 31, under a bill signed into law Monday by Gov. Tom Wolf (D).

The bill (SB 841) provides relief to property taxpayers from the impact of the emergency. It follows an administrative action taken last week to give businesses more time to remit state sales tax they’ve collected. The bill approved by Wolf also gives business firms that have applied for tax credits for education scholarships until the end of the tax year to make the required donations, rather than 60 days from the time of the application’s approval.

Missouri to Cut Spending Anew

Missouri Gov. Mike Parson (R) on Monday announced more than $47 million in additional spending cuts as revenue declines from the impact of the coronavirus.

The cuts will be spread among nine state agencies, the office of Attorney General Eric Schmitt, and the General Assembly, Parson said. The cuts bring to $227 million the total amount of reductions in planned spending as a result of the crisis.

Parson had already announced $180 million in cuts on April 1. The state faces a $500 million shortfall for the fiscal year ending June 30. Parson had previously said he hoped the state would be able to use around $300 million in federal funds to plug the hole.

The state Legislature is set to come back into session April 27 and resume work on the budget.

Michigan Details Deadline Extensions

The Michigan Department of Treasury has issued a pair of notices addressing tax administration issues responsive to the pandemic.

One of the notices issued Friday describes the department’s automatic deadline extensions for filing income tax returns and remitting payments to the state without penalty and interest. The notice lays out rules for individuals, fiduciaries, corporations, and composite filers for returns and payments due between April 15 and July 30.

A second notice announces the hearings division will accept requests for informal conferences via email at the address Treas-Hearings@Michigan.gov. In addition, the department has a new request for hearing form, Form 5713, which should be used when requesting a conference.

Wisconsin Conforms with Federal Law

The Wisconsin Department of Revenue offered taxpayers new guidance Monday on a new state law responding to the pandemic.

The department described statutory language bringing the state into conformity with several features of the federal coronavirus response law (Public Law 116-136). It conforms with federal changes that: exempt certain retirement account distributions from tax; permit deductions for charitable contributions up to $300; permit loan forgiveness on a tax-free basis under the federal small business loan program; and, exclude from income student loan payments made by an employers to qualified employees.

A second guidance statement highlighted new authority granted to the secretary of revenue to extend tax deadlines and waive penalties on a case-by-case basis during the crisis.

Both guidance documents respond to Wisconsin Act 185, signed by Gov. Tony Evers (D) on April 15. The law contained several tax features, but was designed as an omnibus response measure to the public health crisis.

“I know the governor felt it was important to give financial relief to Wisconsin businesses who are hurting at this time,” Revenue Secretary Peter Barca said in a statement. “We at the Department of Revenue are pleased to make available what, essentially, amounts to a no interest loan for eligible businesses.”

Nebraska Affirms Deadlines

The Nebraska Department of Revenue has released guidance specifying that an earlier announcement to extend certain tax filing deadlines applies to all income tax returns with a filing or payment deadline between April 1, 2020 and July 15, 2020.

In a frequently asked questions document the department said April 16 that individuals, trusts, estates, corporations, and other non-corporate tax filers qualify for the new July 15 tax deadline.

Nebraska also clarified that the filing and payment deadlines for the Financial Institution Tax Return (Form 1120NF) are locked in statute and cannot be extended. Nebraska’s tax commissioner, however, has waived any penalties and interest related to payments due between April 1, 2020 and July 15, 2020.

—With assistance from Christopher Brown in St. Louis.

(Updates with information on Oklahoma and Connecticut. Earlier versions added sections on Missouri, Michigan, Pennsylvania, and Wisconsin.)

To contact the reporters on this story: Michael J. Bologna in Chicago at mbologna@bloomberglaw.com; John Herzfeld in New York at jherzfeld@bloomberglaw.com; Paul Stinson in Austin, Texas at pstinson@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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