TWIST - June 28, 2021

Welcome to TWIST for the week of June 28th, featuring Sarah McGahan from the Washington National Tax State and Local Tax practice.

This week, we are covering a few legislative developments and some guidance issued on an upcoming sales tax holiday in Florida. In Colorado, two bills were signed into law that make significant changes to the corporate income and sales and use tax laws. House Bill 1311 requires corporations incorporated in certain foreign jurisdictions to be included in the combined group. The bill also changes Colorado’s apportionment rule for combined filers from the so-called Joyce rule to the Finnigan rule effective for tax years beginning on or after January 1, 2022 and adopts certain tax base changes. On the sales tax side, House Bill 1312 redefines tangible personal property to include digital goods and notes that the method of delivery does not affect the taxability of a sale of tangible personal property. In addition, beginning January 1, 2022, a retailer is not permitted to retain any money to cover the retailer's expenses in collecting and remitting sales tax for any filing period that the retailer's total taxable sales were greater than $1 million.

In Connecticut, Senate Bill 1202, which was recently signed into law, implements the revenue provisions of the state’s budget. On the corporate income tax side, the bill extends the ten percent corporate surtax for the 2021 and 2022 income tax years. In addition, the phase-out of the capital tax, which was scheduled to be completed by 2024, has been slowed. Senate Bill 1202 also authorizes a tax amnesty program to be held from November 1, 2021 through January 31, 2022 and allows qualifying restaurants to retain the sales and use taxes they collect during certain designated weeklong periods.

Until recently, under Vermont law for the 2021 tax year, forgiven PPP loans were includable in income and expenses paid with such amounts were deductible. Recently adopted, House Bill 436 changes the treatment and confirms that for the 2021 tax year, forgiven loans are not taxable in Vermont, and ordinary deductible business expenses paid using forgiven PPP loans are also deductible.  In New Hampshire, Senate Bill 3 amends the Business Profits Tax law to exclude income from forgiven PPP loans. As a result, the New Hampshire tax treatment of forgiven PPP loans will mirror the federal treatment.

The Florida Department of Revenue recently issued a Tax Information Publication announcing the 2021 Freedom Week Sales Tax Holiday. The sales tax holiday begins on Thursday, July 1, 2021 and ends on Wednesday, July 7, 2021. During the sales tax holiday period, sales of qualifying recreation and outdoor items will be exempt from all or some portion of the state and local sales tax. The portion of the sales price of a qualifying item that is exempt from tax varies depending on the type of item. This will likely make this sales tax holiday more challenging for retailers. In addition, purchases of admissions to qualifying entertainment and cultural events scheduled to be held from July 1, 2021 through December 31, 2021 will be exempt from sales tax if they are purchased during the holiday week. The range of covered events includes live music and sporting events, movies, and museum and state park entries as well as admission to a range of cultural and artistic events. 

Thank you for listening to TWIST and stay well.