Most states say they will follow the federal government and treat PPP loan forgiveness as tax-free income

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ARLINGTON, Virginia., June 22, 2021 / PRNewswire / – Small businesses and large corporations likely won’t have to worry about the additional tax burden resulting from forgiving or canceling their Payroll Protection Loans in most states, according to Bloomberg Tax & Accounting 21st annual survey of government tax services. Twenty-nine state tax departments responded that they will follow the federal regime for such forgiveness or waiver under section 1160 (i) of the CARES Act and will not treat these amounts as taxable income. Research summary that includes information on a wide range of corporate income and sales tax issues from senior state tax officials from all 50 states, Washington, as well as New York, available at http://onb-tax.com/pDzj50FbPp2

The 2021 Government Tax Departments Survey focuses on the continuing impact of the Covid-19 pandemic on areas of greatest concern to corporations: federal compliance, nexus issues, government source regulations, taxation of transit entities, transition to economic connectivity, and government tax policies for organizers market. The review also explores how states are implementing their rules of economic nexus afterSouth Dakota v. Wayfair, with an emphasis on calculating thresholds for economic relationship.

“Over the past 15 months, businesses have had to assess the numerous state tax policies that have emerged in response to Covid-19 and determine their impact on their current and future workplace and business models,” he said. Christine Beckel, Director of Government Tax Analysis and Content, Bloomberg Tax & Accounting. “Our research provides key insights into government policy shifts and provides much-needed clarity to tax professionals by presenting states’ own interpretations of their rules and procedures as they adapt to new business paradigms.”

“Bloomberg’s tax research provides an excellent overview of what multinational companies and tax practices face on a daily basis: a complex and heterogeneous enforcement environment,” he said. Matt Headstrom, partner, Alston & Bird. “This complexity is only increasing, and this survey does an excellent job of identifying the nuances that exist in this rapidly changing landscape.”

Other key findings from the survey:

  • Thirty-seven states indicated that one to six employees who do not engage in extortion will create an out-of-state corporation link if the employee works remotely from their own state. However, half of those states have issued regulations suspending this interconnection requirement for employees working remotely due to Covid-19.
  • Only 15 states said they levy a corporate-level tax on transit organizations. However, these states were divided over whether an organization should pay tax at the organization level: eight states said the tax was mandatory, but seven said it was optional.
  • Most states (33) responded that their sales tax interconnection standard is based on both physical presence and economic interconnection. Fewer, but not insignificant, number (seven) stated that they only use the physical presence standard or only the economic communication standard (12). However, many of these states answered “yes” to more than one question, implying that they are using both standards.
  • Sixteen states have stated that sales of an affiliated company count towards economic nexus thresholds.

State tax professionals interested in learning more about this year’s survey results and major trends can visit the free Bloomberg Tax and Accounting Webinar at Thursday 24 June in 14:00 ET… Registration is available on the website http://onb-tax.com/4BhS50F7KNp

About Bloomberg Tax & Accounting
Bloomberg Tax & Accounting delivers actionable research and technology solutions that provide timely strategic information to drive smarter decisions. From our unparalleled tax management portfolios to technologies designed to optimize the most challenging planning and compliance scenarios, we deliver critical news and insights, actionable perspectives and software to help tax and accounting professionals around the world mitigate and maximize risk. business results. For more information visit pro.bloombergtax.com

SOURCE Bloomberg Tax & Accounting

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