TWIST - March 8, 2021

Welcome to TWIST for the week of March 8th, featuring Sarah McGahan from the Washington National Tax State and Local Tax practice.

The first development today is an Alabama Tax Tribunal decision holding that a taxpayer did not owe City use tax on materials that were temporarily present in the City of Bessemer, Alabama before being used out-of-state. Although the materials were stored in the City and some assembly occurred while at the taxpayer’s facility in the City, the taxpayer established to the Tribunal that it intended to use the materials outside of Alabama.

Next up, we’ve got a lot of legislation to talk about. First of all, several fixed date states- Idaho, Georgia, South Dakota, Virginia, and West Virginia- have recently passed legislation updating their conformity to the Internal Revenue Code. This is important because, for certain of these states, the last time the states’ conformity was updated was before the CARES Act and the recent Consolidated Appropriations Act.  In other news, on March 4 House Bill 6516 was signed into law in Connecticut that is intended to alleviate the burden of double taxation for residents who were remotely working from their homes in Connecticut due to COVID-19.  The bill allows a credit against Connecticut personal income tax for any resident who paid income tax in 2020 to a state that applies a convenience of employer rule similar to Connecticut’s, or any state that by law or rule required the resident to pay a nonresident income tax based on work performed remotely in Connecticut (assuming the resident worked in the other state immediately prior to March 11, 2020). The bill also provides that an employer will not establish nexus by having an employee working in the state due to COVID-19. Finally, there are a number of states that have proposals to tax financial transactions and/or investment income and wealth. We’ve summarized these proposals in Illinois, New Jersey, New York, and Washington State.