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Telework and State Tax Nexus
Stay-at-home orders issued during the COVID-19 pandemic are raising questions regarding state tax nexus, as the widespread move towards telework may expose businesses to taxation in states where they may not otherwise have sufficient nexus.
Thus far, only a very few states have offered guidance regarding telework and state tax nexus, with most stating that temporary telework will not create nexus. Below is a list of the states and their nexus guidelines:

Taxpayers should continue to monitor state responses and discuss possible nexus issues with their tax advisors.

Southwestern States Tax Relief
As stay-at-home orders and the economic fallout of the COVID-19 pandemic continue, states continue to update the tax relief available to taxpayers. The following summarizes the latest news in the Southwest.

Arizona

Income Tax
On April 13, the Arizona Department of Revenue confirmed that the deadline for income tax year 2020 estimated tax payments remained April 15, 2020.

Sales Tax
The Department of Revenue also reiterated that there have been no changes to the transaction privilege tax (TPT) filing and payment deadlines at this time.

Property Tax
County treasurers continued to urge the state to extend property tax deadlines in a April 6 letter to Governor Doug Ducey, and requested taxpayers contact legislators to voice support for an extension.

California

Estimated Payments and Other Due Dates
The California Franchise tax Board (FTB) updated its guidance on estimated payments for the 2020 income tax year.

2020 individual estimated payments are due as follows:

  • 1st & 2nd Quarter: extended to 7/15/2020
     
  • 3rd Quarter: N/A
     
  • 4th Quarter: 1/15/2021
     

For c-corporations, s-corporations, and exempt organizations, the following deadlines apply:

  • 1st Quarter: Estimated payments due on or between 3/12/2020 and 7/15/2020 are due 7/15/2020
  • 2nd Quarter: 7/15/2020

Taxpayers are permitted to combine the 1st and 2nd quarter estimated payments into one payment due by July 15.

The FTB’s guidance also provides that new extension deadlines apply to any business entity with a California return or payment due between March 12 and July 15, including c-corporations, s-corporations, limited liability companies, partnerships, and other entities. Taxpayers should check the FTB’s table of extensions for specific deadlines.

1031 Like-Kind Exchanges
The FTB’s guidance also extended deadlines for 1031 like-kind exchanges. If a taxpayer’s 1031 like-kind exchange identification period or exchange period is due to expire on or after April 1 and before July 15, the identification and exchange periods are extended to July 15.

Colorado

Income Tax
The Colorado Department of Revenue updated its return due date schedule on April 15. The table summarizes the emergency provisions applicable to a number of income tax and withholding returns, as well as estimated payments.

Sales Tax
In Executive Order D 2020 023 (April 5, 2020), Governor Jared Polis extended the deadline for filing and paying state and state-administered local sales taxes from April 20 to May 20. The order also directs the Colorado Department of Revenue to waive penalties and interest that would otherwise accrue during the period. However, retailers that do not file and remit full payment on or before April 20 will not be permitted to retain the vendor fee in C.R.S. § 39-26-105(1)(c) and (d) (including the vendor fee that applies to state-administered local sales taxes).

The Department clarified that the extension does not apply to self-collecting home-rule taxing jurisdictions.

Severance Tax
As required by Executive Order D 2020 033 (April 9, 2020), which temporarily suspends certain severance tax deadlines, the Colorado Department of Revenue adopted temporary Emergency Rules 39-29-104-2 and 39-29-112-2. These rules extend the following severance tax deadlines to May 15, 2020:

  • Estimated severance tax payments due on or before April 15
     
  • Quarterly declaration forms and tax payments for all molybdenum ore due on or before April 15
     

The rules also granted an additional extension, until May 15, for returns which had previously been granted an extension to April 15.

Property Tax
Following the March 18 notice urging county assessors to work with their county attorneys on property tax relief, some local jurisdictions have adopted relief measures, including waiving penalties and interest on late property tax payments through April 30 and extending the deadline for filing the 2020 business personal property declaration. Taxpayers should contact their local assessor’s office for additional information.

Nevada
No new updates at this time.

New Mexico
No new updates at this time.

Texas

Sales Tax
On April 16, the Texas Comptroller’s Office reiterated that sales tax assistance may be available, but urged taxpayers to file sales tax returns that are due on April 20, make a good faith partial payment, and then contact the Enforcement Hotline at 800-252-8880 to learn about options for remaining in compliance and avoiding interest and late fees on taxes due.

Property Tax
The Texas Attorney General issued Opinion KP-0299 (April 13, 2019), concluding that the temporary tax exemption in Tex. Tax Code § 11.35 does not apply to property that has suffered an economic loss, but no physical damage, as a result of the COVID-19 disaster declared by Governor Greg Abbott on March 13. The opinion found that a court would likely conclude that the Texas Legislature intended to limit the temporary tax exemption to apply to property physically harmed as a result of a declared disaster and, as such, purely economic, non-physical damage to property caused by the COVID-19 disaster is not eligible for the temporary tax exemption.

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