Numerous state and local jurisdictions have responded to the COVID-19 (“coronavirus”) outbreak by providing relief to taxpayers, primarily through extended filing and payment deadlines. We expect that many more jurisdictions will issue guidance in the coming weeks, particularly because the federal government recently announced its 90-day income tax payment extension plan.
Coronavirus is also impacting state and local tax litigation. Many state courts and administrative tax appeals tribunals are responding to the coronavirus outbreak by pushing back hearing dates and interim deadlines, and some are even moving to conduct oral arguments remotely.
Tax Filing Deadline Postponements
The following state and local jurisdictions have extended certain tax filing deadlines in response to coronavirus:
California and San Francisco
California has extended certain filing and payment deadlines until June 15 for individual filers, partnerships (including LLCs taxed as partnerships), and businesses with quarterly estimated tax payments.
San Francisco Mayor London Breed deferred the due date for first quarter estimated tax payments from April 30, 2020 to February 2021 for businesses with up to $10 million in gross receipts. San Francisco will also defer licensing fees for three months.
The Connecticut Department of Revenue Services announced an automatic extension of filing and payment deadlines for certain annual state tax returns. Effective immediately, certain business tax filings and corresponding payments due on or after March 15, 2020, and before June 1, 2020, are extended at least 30 days.
Florida Governor Ron DeSantis announced that the state’s Department of Revenue will defer some corporate income tax payments until the end of the fiscal year.
Maryland Comptroller Peter Franchot announced that the state tax department will extend March, April, and May 2020 business-related filing deadlines to June 1, 2020. This includes sales and use tax, withholding tax, and various excise taxes and fees.
The Oregon Department of Revenue announced that it will not assess underpayment penalties to Corporate Activity Tax (“CAT”) taxpayers that make a good faith effort to estimate their first quarter payments. Initial quarterly CAT payments remain due on April 30, 2020.
Washington and Seattle
Washington will allow businesses impacted by coronavirus to request filing and payment extensions and penalty waivers related to business tax filings.
Seattle has deferred business and occupational tax filings for certain small businesses.
We expect that many more jurisdictions will issue guidance in the coming weeks, particularly because the federal government is now providing tax payment relief.
A number of states indicated they were awaiting Treasury’s extension of federal filing deadlines before issuing state-level extensions in order to minimize confusion. On March 17, 2020, Treasury Secretary, Steven Mnuchin, announced that the U.S. Department of the Treasury will delay income tax payment deadlines for individuals and corporations for an extra 90 days from April 15. Individuals can defer up to $1 million in tax due and corporations can defer up to $10 million in tax due without incurring interest or penalties. It is important to note that this is a payment extension only; individuals and corporations are still expected to file their tax returns by April 15. In the coming days and weeks, we expect that a large number of states will follow suit and implement similar measures to ease the impact of COVID-19 on businesses and individuals.
It is worth noting that many tax departments are mandating employees work from home, which will likely cause delays for day-to-day activities within the department (e.g., audits, letter rulings, call center guidance, etc.).
COVID-19 is also causing delays in state and local tax litigation. Many state trial courts and administrative tax appeals tribunals are adjourning hearing dates and certain interim deadlines. For example, while the New York Tax Appeals Tribunal (which handles most tax cases in New York) has not yet published guidance on how it will handle upcoming hearings and oral arguments, we understand that they remain open, but are operating at reduced capacity based upon our conversations with them. Additionally, New York State’s Unified Court System published a memorandum on its website indicating that New York trial courts will be “postponing all non-essential functions” and that no new civil trials will commence “until further notice.” However, ongoing trials will proceed to conclusion. Similarly, Cook County Circuit Court in Illinois, which frequently hears taxpayer Protest Monies Act claims, announced that it has postponed all civil matters that are not deemed an emergency for 30 days. The U.S. Supreme Court has even postponed all oral arguments scheduled for March (noting that no state tax cases were schedule to be heard).
Some courts are even moving to conduct their oral arguments remotely. For example, the Supreme Court of California has suspended in-person oral arguments. Instead, counsel will appear remotely via video, telephone conference, or other electronic means. We have also learned that the New York State Bureau of Conciliation and Mediation Services plans to conduct certain scheduled conciliation conferences remotely, with decisions currently being made on a case by case basis.
We expect to see further guidance from various state trial courts and administrative tax tribunals in the coming weeks as they decide how to respond to COVID-19.