Detailed Multistate Development
This past week, many states and localities continued to issue guidance on extensions of time to file and pay upcoming state and local taxes. In addition, a few states are starting to speak out on other tax issues resulting from COVID-19. On March 30, 2020, the New Jersey Division of Taxation announced that it would temporarily waive the impact of a statute providing that having employees working from home in New Jersey creates nexus for Corporation Business Tax purposes. The waiver will apply if employees are working from home solely as the result of closures due to the Coronavirus outbreak and/or the employer’s social distancing policy. New Jersey also issued guidance for employers and employees on income tax withholding.
In other news, legislation (SB 7508/AB 9508) signed into law on April 3, 2020 in New York, includes provisions decoupling New York State and City from recent federal changes to IRC section 163(j) that were enacted to provide relief to businesses as a result of COVID-19. Under the Tax Cuts and Jobs Act, net interest expense is limited to the extent it exceeds 30 percent of a taxpayer’s adjusted taxable income (ATI). Under the recently-signed CARES Act, taxpayers can deduct interest expense up to 50 percent of ATI for the 2019 and 2020 tax years only. The Act also allows a taxpayer to elect for tax years beginning in 2020 to use taxable income for the tax year beginning in 2019. Part WWW of the New York budget bill provides that for taxable years beginning in 2019 and 2020, entire net income shall be determined without regard to the increase in the federal interest deduction allowed under the CARES Act. Further, for New York personal income tax purposes, the bills provide that for tax years beginning before January 1, 2022, any amendments made to the Internal Revenue Code after March 1, 2020 shall not apply.
To read about recent state and local tax guidance on extensions in response to COVID-19, please click here and bookmark KPMG TaxNewsFlash-United States to stay current as more guidance is regularly released.
This Week's Developments
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