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States Provide Tax Relief Amid Coronavirus Concerns

Posted on Mar. 17, 2020

States are extending tax filing deadlines for businesses and looking to provide business tax relief as officials brace for a potential economic downturn from the impact of the coronavirus.

With tax filing season underway, the Connecticut Department of Revenue Services (DRS) announced that it will grant an automatic extension for filing dates and payment deadlines for some business tax returns due on or after March 15 and before June 1.

The extension applies to CT-1065/CT-1120 passthrough entity tax returns, CT-990T unrelated business income tax returns, and CT-1120 and CT-1120CU corporation business returns, the department said. 

DRS understands some business taxpayers may find it difficult to meet tomorrow’s state tax filing deadline, given current circumstances,” acting department Commissioner John Biello said in the March 16 announcement. “This extension is designed to support these taxpayers, and tax practitioners, meet their responsibility to file returns and remit payments. DRS encourages those with questions specific to their own, individual circumstances to call or e-mail the agency.”

In Maryland, Comptroller Peter Franchot (D) announced March 11 that he will extend deadlines for business returns due in March, April, and May to help businesses that have been affected by the coronavirus.

The extension applies to sales and use tax, withholding tax, admissions and amusement tax, tobacco and motor fuel excise tax, tire recycling fee, and bay restoration returns. Interest and penalties will be waived for businesses that meet the extended due date, the comptroller’s office said.

"Our state’s top priority is safeguarding public health for Marylanders, but we must also protect the financial health of our economy," Franchot said in a March 11 release. "This extension will provide much-needed relief to our business owners as they adjust to changes in consumer behavior, tourism trends, and employee workforce output. Maryland will also extend our corporate and individual income tax return filing deadlines if the IRS announces an extension."

Franchot has also urged Gov. Larry Hogan (R) and the General Assembly to use a minimum of $500 million from the state rainy day fund to help small businesses affected by the coronavirus. 

"The loss that is suffered every time a small business closes in a community is severe and far-ranging. The decimation of our small business sector in the State of Maryland and in the United States would, I believe, catapult us into the worst economic climate since the 1930s," Franchot said in a March 16 release.

Other states are taking legislative action to provide relief.

In New Jersey, Assembly legislators passed A. 3841 on March 16, according to a release. The bill would automatically extend the filing deadline for a gross income tax or corporation business tax return if the federal deadlines are extended.

And in the District of Columbia, emergency legislation was introduced to extend the deadline for real property tax payments for hotels from March 31 to June 30. The bill would allow other businesses to remit sales taxes due in February and March but defer payment until September 20, without facing fees, fines, penalties, or interest. 

California is also giving taxpayers additional time to file their taxes.

On April 13, the Franchise Tax Board announced a 90-day extension for some returns and payments due March 15 through June 15. The extension applies to partnerships and LLCs who are taxed as partnerships, individual filers whose returns are due April 15, and quarterly estimated payments.

On its website, the Washington State Department of Revenue said it will “work with businesses that cannot pay their taxes on time due to the COVID-19 outbreak,” noting that the governor’s February 29 emergency proclamation gives the agency more flexibility in working with affected businesses.

The Oregon Department of Revenue announced it won’t assess underpayment penalties to taxpayers that make a “good faith effort to estimate” their first quarter payments due April 30 for the new corporate activity tax.

If the IRS extends the April 15 filing deadline for personal income taxes, the DOR said it will automatically extend its deadline as well.

The department said estimated payment due dates for personal income tax won’t be extended. However, interest won’t be imposed on an underpayment of estimated tax if the department “determines that by reason of casualty, disaster, or other unusual circumstances the imposition of interest would be against equity and good conscience.”

Meanwhile, some state legislatures have postponed sessions or will end them early to mitigate the spread of the virus. As of March 14, legislatures including Colorado, Connecticut, Delaware, Georgia, Illinois, Kentucky, Maine, Nebraska, New Hampshire, Rhode Island, and Vermont had postponed their legislative sessions, according to the National Conference of State Legislatures.

Some governments are predicting billions in lost revenue because of the pandemic.

New York City Comptroller Scott Stringer announced on March 16 an estimated $3.2 billion in lost tax revenue over the next 6 months because of the coronavirus. He urged the city to identify $1.4 billion in potential savings, stating that it should be included in Democratic Mayor Bill de Blasio’s executive budget expected in April.

“We’re facing the possibility of a prolonged recession — we need to save now, before it’s too late, if we’re going to weather the downturn ahead. Once again, I’m urging the City to immediately instruct all City agencies to identify savings in their City tax levy-funded budgets, with certain exceptions for vital public health and social services, to be included in the Mayor’s Executive Budget,” Stringer said. 

Policy experts are urging lawmakers to proceed with caution on budgetary matters to stem revenue losses that could result from an economic downturn. In a March 16 analysis, Jeff Chapman of the Pew Charitable Trusts encouraged lawmakers to use budget stress tests to compare gaps between revenue and spending to mitigate the impact. 

State Tax Today reporters Aaron Davis, Paul Jones, and Carolina Vargas contributed to this story. 

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