TWIST - March 23, 2020

Welcome to TWIST for the week of March 23. This is Sarah McGahan from KPMG’s Washington National Tax state and local tax practice.

First up this week is actually a follow up to last week’s TWIST in which we discussed certain tax proposals being considered in Maryland. In the last few days of the Maryland legislative session- which ended earlier than usual due to the Coronavirus-certain tax bills passed both houses and have now been sent- or will soon be sent- to the Governor for consideration. 

House Bill 732, which is currently enrolled, was amended to include provisions imposing a tax on digital advertising gross revenues. Specifically, if this bill is enacted, effective for tax years beginning on or after December 31, 2020, a new tax would be imposed on annual gross revenues derived from digital advertising services in Maryland.  Another enrolled bill is House Bill 932, the 21^st Century Economy Sales Tax Act. As passed both chambers, this bill redefines the term “retail sale” to include the sale of certain digital products effective July 1, 2020. Finally, on the income tax side, Senate Bill 523 was amended to include a new election for pass-through entities to pay tax at the entity level with respect to resident owners.

This week we are also covering two state tax cases. In the first, the Michigan Court of Appeals held that the statutory apportionment formula under the former Michigan Business Tax did not fairly reflect a taxpayer’s income earned in the state on the sale of an out-of-state business.  The case was remanded back to the Michigan Department of Treasury to determine an appropriate alternative apportionment method.  In property tax news, a Georgia appellate court affirmed a trial court’s decision granting a taxpayer a so-called Freeport property tax exemption on parts stored in the state before being shipped to out-of-state locations

Finally, in the last week, a number of jurisdictions have responded to COVID-19 and have issued guidance for taxpayers on extensions of time to file and pay upcoming state and local taxes, as well as additional information on matters such as agency shutdowns and suspensions of time to file protests, etc. As this situation is extremely fluid, we expect more guidance will be forthcoming in the next few days. Further, it is likely that initial guidance will be revised as the state of emergency fluctuates.  Rather than report each and every state and local update in TWIST, we are providing a link to a cumulative summary of the jurisdictions that have recently issued guidance on extensions of time for filing and payment of income, sales and/or other state taxes, or penalty relief in light of COVID-19. We have also provided a link to the state website where the guidance is housed. As states start issuing guidance on important tax issues, or tax relief legislation aimed at businesses, we will of course cover those in TWIST.  Thank you for reading and stay well.

To read about recent state and local tax guidance in response to COVID-19, please click here and bookmark KPMG TaxNewsFlash-United States to stay current as more guidance is regularly released.