TWIST - October 26, 2020

Summary of state tax developments in Louisiana, New Jersey, and Multistate responses to COVID-19.

Weekly TWIST Podcast Overview

This Week's Developments

Welcome to TWIST for the week of October 26, featuring Sarah McGahan from the Washington National Tax State and Local Tax practice.

Our first development today is a decision in which a Louisiana appeals court held that an out-of-state production company lacked personal jurisdiction with Louisiana and therefore could not be sued in Louisiana courts for non-payment of corporate income and franchise taxes. In reaching this conclusion, the court observed that the company had zero contacts with Louisiana aside from the activities of unrelated third parties that licensed a game show and intangible associated with the show. The court concluded that the “random, fortuitous, and attenuated contacts with Louisiana, that were initiated by the independent activities of third parties, were simply not sufficient to establish personal jurisdiction” over the company in Louisiana.

In other news, two technical corrections bills have been introduced in the New Jersey legislature and were recently reported from Committee with amendments. The technical corrections generally relate to the Corporation Business Tax (CBT) law changes enacted in 2018 that became effective for privilege periods ending on or after July 31, 2019, including the implementation of unitary combined reporting.  If enacted, the bills would make clarifying and procedural changes, as well as certain substantive changes, to the CBT law.

Finally, states continue to issue guidance on tax related issues associated with COVID-19. The New York Department of Taxation and Finance noted in the FAQ that if a New York nonresident’s primary office is in New York State, the days telecommuting during the pandemic are considered days worked in New York unless the employer has established a bona fide employer office at the telecommuting location. This means that days worked at home in New Jersey or Connecticut will be considered to have been worked “for convenience” in New Jersey or Connecticut, and thereby default to the employer’s New York work office to which the employee is primarily assigned.  Along the same vein, Massachusetts finalized a regulation generally providing that  compensation received for services performed by a non-resident who, immediately prior to the Massachusetts COVID-19 state of emergency was an employee engaged in performing such services in Massachusetts, and who is performing services from a location outside Massachusetts due to a pandemic-related circumstance will continue to be treated as Massachusetts source income subject to personal income tax and personal income tax withholding. Maine Revenue Services issued a Tax Alert addressing various tax issued associated with COVID-19.

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Featured Speaker

Sarah McGahan

Sarah McGahan

Managing Director, State & Local Tax, KPMG US