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

As we move into the fall, states continue to respond to COVID-19 and the CARES Act. One of the ongoing concerns during the pandemic is how to obtain taxpayer signatures on tax returns and other paper-filed documents when people are working remotely. The Michigan Department of Treasury recently announced that it will permit digital signatures on certain forms, even if the forms cannot be filed electronically. The Department notes that it already accepts digital signatures for individual income tax, corporate income tax, and sales and use tax returns when the returns are submitted electronically.

In other news, California Governor Newsom signed Assembly Bill 1577, which provides that for taxable years beginning on or after January 1, 2020 loan amounts forgiven under the Paycheck Protection Program will not be included in gross income for individual and corporate income tax purposes. On August 31, House Bill 6013 was signed into law in in Utah retroactively allowing an unlimited net operating loss deduction for tax years beginning on or after January 1, 2018. The 80 percent limitation is reinstated for tax years beginning on or after January 1, 2021. The governor also signed Senate Bill 6005, which addresses the income tax treatment of amounts received in response to COVID-19. For a taxable year beginning on or after January 1, 2020, Utah exempts the amount of a forgiven Paycheck Protection Program (PPP) loan from for state corporate franchise and income tax purposes. Amounts forgiven under the PPP loan and any grant funds received by a taxpayer must be subtracted from a Utah taxpayer’s unadjusted income.

In the District of Columbia, the Office of Tax and Revenue announced that it will extend the period under which temporary presence of employees or property in the District will not create nexus for purposes of the corporate franchise tax or unincorporated business tax. This policy will apply based on any extensions provided by the Mayor and for 90 days after the Mayor declares the end of the public emergency. The guidance also provides that presence of employees in the District due to the emergency will not cause a business to lose its P.L. 86-272 protections. Please stay tuned to TWIST for additional COVID-19 and CARES Act updates.