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Multistate: More states respond to COVID-19 and the CARES Act

Listen to a brief overview of state tax developments this week, including Multistate responses to COVID-19.

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Detailed Multistate Development

The California Franchise Tax Board (FTB) recently extended the period of time during which taxpayers can sign certain documents with alternative signatures.  For paper returns and other documents that must be signed with an original signature by a taxpayer or the taxpayer’s representative, the FTB has extended the period for using alternative signatures through December 31, 2020, except for Power of Attorney documents.  The FTB sets forth two alternative signature methods for paper-filed returns. The taxpayer can attach a document with the paper filed return that provides a copy of the original signature. The attached document should identify what the document signature is for (Example: Corp XX, 2019 Form 100) and state “refer to the attachment for a copy of the original signature” on the signature line.  Alternatively, the taxpayer may file a paper return with a faxed signature on the signature page. For all other documents requiring an original signature, except POAs, the FTB will accept documents with photographed or digital copies of required signatures.

The South Carolina Department of Revenue has issued an information letter (#20-03) that addresses the taxability of charges imposed by retailers related to COVID-19. Under South Carolina law, sales tax is imposed on the “gross proceeds of sales.” Gross proceeds of sales includes all value that comes from or is a direct result of the sale of tangible personal property. Therefore, under South Carolina law, a COVID-19 surcharge or fee, a handling fee, a takeout charge, or a similar fee charged by a retailer, as part of the sale of tangible personal property, is includable in gross proceeds of sales, and subject to the sales tax, unless otherwise exempt.

The Tennessee Department of Revenue has issued guidance on the state’s conformity to the CARES Act for excise tax purposes.  First, Tennessee will adopt the change in recovery period (from 39 to 15 years) that applies to Qualified Improvement Property, but the Department reminds taxpayers that Tennessee does not conform to bonus depreciation.  Tennessee excise tax law conforms to IRC section 163(j), including the CARES Act, for tax periods beginning after December 31, 2017 and before January 1, 2020. However, for tax years beginning on or after January 1, 2020, Tennessee has decoupled from IRC section 163(j) limitations. The guidance confirms that Tennessee will conform to the exclusion from gross income for any Paycheck Protection Program loan forgiveness. It further reminds taxpayers that Tennessee does not follow federal law with respect to net operating losses. Please stay tuned to TWIST for additional CARES Act and COVID-19 guidance. 

To read about the 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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Featured Speaker

Sarah McGahan

Sarah McGahan

Director, State & Local Tax, KPMG US