Information current as of December 31, 2020.
The SARS-CoV-2 virus and the incidence of COVID-19 are changing life across the globe. Many taxing jurisdictions are taking mitigating actions to create social distance and aid taxpayers. The following is a running list of actions by jurisdiction, which generally result in additional time to file and/or pay. Further, many jurisdictions have closed their offices to in-person use by taxpayers and suspended their audit and administrative functions. This alert doesn’t cover similar waivers from local-level taxing authorities. These developments continue to quickly evolve; check with your BKD Trusted Advisor™ or visit our COVID-19 Resource Center for current information as needed.
Information Specific to Pennsylvania
- The DOR extended the filing deadline for state taxpayers until July 15, giving filers an extra 90 days. The DOR also will waive penalties and interest on 2019 personal income tax payments through the new deadline, both for final 2019 tax returns and payments, and estimated payments for the first and second quarters of 2020.
- Pennsylvania DOR Notice, March 23, 2020.
- The statutory deadline for holders to file and remit unclaimed property remains April 15, 2020. However, the DOR will waive all fines, penalties and interest otherwise applicable for all late-filed reports and property received by the DOR on or before June 15, 2020.
- Pennsylvania Treasury website, March 25, 2020.
- Legislative COVID-19 relief includes extension of the income tax filing and payment deadlines until July 15 without penalty or interest for personal income tax, estimated personal income tax and the filing of informational returns by S corps, partnerships, estates and trusts. In addition, the law authorizes Pennsylvania’s Department of Community and Economic Development to coordinate with local units of government to extend filing and payment deadlines for the local earned income tax.
- H.B. 1232, passed effective March 27, 2020, and DOR Notice, April 2, 2020.
- Pennsylvania has announced that businesses that collect state sales tax won’t have to make accelerated sales tax prepayments over the next three months. This means businesses that normally have a monthly prepayment requirement won’t be charged penalties for missing the prepayment deadline during this three-month period. Under this new scenario, the DOR is asking businesses to simply remit the sales tax they collected during the prior month. The due dates to remit sales tax will be April 20, May 20 and June 22, which follows the standard due dates for monthly filers who have no prepayment requirement.
- Governor’s Press Release, April 14, 2020.
- Pennsylvania extended the individual income tax return filing and payment deadline to July 15 from April 15 for taxpayers who received more than $33 in total gross taxable income in 2019. The July 15 extension also applies to trust income and corporate income tax informational returns related to S corporations, partnerships, and estates and trusts. Corporate income tax returns were extended to August 14 and February 16, 2021 for officially extended returns.
- Pennsylvania DOR Notice, April 20, 2020.
- The Educational Improvement and Opportunity Scholarship Tax Credit is amended for pandemic periods to extend the requirement that business firms make a contribution to a scholarship organization no later than 60 days following the approval of an application for an educational tax credit to the end of the business firm’s tax year. However, the business firm must provide proof of its contribution in the form of a written acknowledgment from the organization to the Department of Community and Economic Development (DCED) within 30 days of date the contribution is made. Also, business firms fulfilling year two of a two-year commitment must be permitted to receive a tax credit of up to 90 percent of the amount contributed in year two, and the DCED is prohibited from reducing the credit authorized in year one of the two-year commitment if the year two contribution is less than the year one contribution.
- Pennsylvania S.B. 841, effective April 20, 2020
- Pennsylvania has extended the due date for corporations with tax returns due in May through August 14, 2020, until February 16, 2021. Note that the additional six-month extension only applies to filing the tax return; the extension doesn’t extend the time period for payment of the corporate net income tax due.
- Pennsylvania DOR Notice, May 6, 2020.
- As a result of COVID-19 causing people to temporarily work from home as a matter of safety and public health, the department won’t seek to impose corporate income tax nexus solely on the basis of this temporary activity occurring during this emergency.
- Pennsylvania DOR website, May 14, 2020.
- Pennsylvania provided information related to COVID-19 tax relief, including online and phone assistance available to taxpayers at revenue district offices, updates on relief offered to taxpayers during the pandemic, notice that the requirement for accelerated sales tax prepayments resumed in July 2020, and the board of appeal’s operating guidelines during the pandemic.
- Pennsylvania Tax Update No. 208, July 31, 2020.
- Pennsylvania announced due date extensions for income tax returns and payments to provide additional time for taxpayers during the COVID-19 pandemic. The revised due dates are February 16, 2021, for corporations to file Form RCT-101; January 15, 2021, for individuals to file Form PA-40 and nonresidents to file Form PA-40NRC; December 31, 2020, for trusts and estates to file Form PA-41; and December 15, 2020, for partnerships and S corporations to file Form PA-20S/PA-65.
- In addition, Pennsylvania provided information on pausing payments for existing payment plans and flexible terms for new payment plans; a temporary reduction or suspension in collection and enforcement activities; tax credit and incentive programs; penalty abatement when taxpayers have remitted all outstanding trust fund taxes; and suspension of all board of appeals in-person hearings.
- Pennsylvania DOR COVID-19 FAQs, September 24, 2020.
- Pennsylvania issued guidance relating to telecommuting and related tax implications. If an employee is working from home temporarily due to the COVID-19 pandemic, the DOR does not consider that as a change to the sourcing of the employee’s compensation. For nonresidents who were working in Pennsylvania before the pandemic, their compensation would remain Pennsylvania-sourced income for all tax purposes, including PA-40 reporting, employer withholding, and three-factor business income apportionment purposes for S corporations, partnerships, and individuals. Conversely, for Pennsylvania residents who were working out of state before the pandemic, their compensation would remain sourced to the other state and they would still be able to claim a resident credit for tax paid to the other state on the compensation. For a Pennsylvania employer with a nonresident employee temporarily working from home due to the COVID-19 pandemic in a state that does not have a reciprocity agreement with Pennsylvania, the Department advises that the employee’s compensation remains Pennsylvania sourced, and the employer is required to withhold on the compensation.
- Pennsylvania DOR Telework During the COVID-19 Pandemic, issued November 9, 2020, and in effect until the earlier of June 30, 2021, or 90 days after the Proclamation of Disaster Emergency in Pennsylvania is lifted.