TWIST - October 19, 2020

Summary of state tax developments in California, Tennessee, Vermont, and Multistate responses to COVID-19.

Weekly TWIST Podcast Overview

This Week's Developments

Welcome to TWIST for the week of October 19, featuring Sarah McGahan from the Washington National Tax State and Local Tax practice.

Our first development today is a decision from the Vermont Supreme Court. The issue in the case was whether gain from the sale of two FCC licenses was allocated to Vermont.  The licenses allowed the taxpayer to broadcast in New York, but they were never used to do so. It was undisputed that the gain constituted nonbusiness income that would be allocated to Vermont if the licenses were located or had a situs in Vermont, or if Vermont was the taxpayer’s commercial domicile. The court rejected the taxpayer’s argument that the licenses had a situs in New York because they were never subject to the protections of New York or benefits provided by New York.  Because the licenses lacked a location or situs, under Vermont’s regulation, the gain was required to be allocated to the taxpayer’s commercial domicile. The Vermont high court, agreeing with the Commissioner, applied a test that looked at a variety of factors and concluded that Vermont was the taxpayer’s commercial domicile.

The Tennessee Department of Revenue recently ruled that a financial institution was not doing business in Tennessee and was not subject to Tennessee franchise and excise tax.  The taxpayer’s activity was limited to owning interests in loans and collecting income from mortgaged property. Under Tennessee law,  a financial institution is not deemed to be doing business in Tennessee if its only activity in the state is “the ownership of an interest in a loan … attributed to this state and in which the payment obligations were solicited and entered into by a person that is independent and not acting on behalf of the owner.” The Department concluded that the taxpayer qualified for this exception.

Next, the City of Los Angeles Office of Finance is administering a tax amnesty program from October 1, 2020 through December 17, 2020. Under the program, both registered and unregistered businesses can apply to receive a waiver of penalties on debts associated with various taxes administered by the City. Interest waivers are not available. Taxpayers may also request an installment agreement for a term of not more than six months.

States continue to issue guidance on tax matters stemming from COVID-19 and the CARES Act. In this past week, the Oregon Department of Revenue adopted a temporary regulation providing that due to the difficultly of obtaining a wet signature as a result of COVID-19, personal income and corporate taxpayers may sign paper returns, statements, or documents using an alternative method.

In other corporate filing news, New Jersey Governor Phil Murphy issued an executive order, in line with guidance already issued by the Division, providing that the due date for filing the 2019 Corporate Business Tax return is extended from October 15, 2020 to November 16, 2020.

Finally, in New York, legislation was recently introduced in the Senate that would provide an exclusion from individual gross income for loan amounts forgiven under the federal paycheck protection program.

Thank you for listening and stay well. 


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Featured Speaker

Sarah McGahan

Sarah McGahan

Managing Director, State & Local Tax, KPMG US