State & Local Tax Impacts of COVID-19 for Arkansas – 2021

Thoughtware Alert Published: May 03, 2021 | Updated: May 05, 2021
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Information current as of April 7, 2021.

COVID-19 has changed 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 Arkansas

  • Arkansas legislation exempts unemployment compensation benefits and unemployment insurance benefits from individual income tax for calendar years 2020 and 2021. The law includes measures creating an exemption from the tax imposed by the Income Tax Act of 1929 for 1) unemployment compensation benefits paid from federal unemployment funds for calendar-year 2020 or 2021; and 2) unemployment insurance benefits received from unemployment compensation paid under Title IV of the Social Security Act for calendar-year 2020 or 2021.
    • Arkansas S.B. 236, enacted March 2, 2021, and retroactively effective to January 1, 2020.
  • Arkansas legislation excludes forgiven loans, payments, and expenses related to COVID-19 relief programs from gross income. The law excludes from the definition of “gross income” any income received through the following federal COVID-19 relief programs: loan forgiveness under the Paycheck Protection Program (PPP); U.S. Small Business Administration grants under the Economic Injury Disaster Loan (EIDL) program; and payments received under the Coronavirus Food Assistance Program (CFAP). Taxpayers also may deduct otherwise allowable expenses incurred using forgiven PPP loans, EIDL grant funds, and CFAP funds. Further, the exclusion from gross income of forgiven PPP loans and other CARES Act funds doesn’t affect the inclusion of such income for purposes of calculating net operating loss carryovers.
    • Arkansas H.B. 1361, enacted March 2, 2021, and retroactively effective for tax years beginning on or after January 1, 2019.
  • Arkansas extended the 2020 tax filing and payment deadlines to May 17 from April 15 for income tax returns for individuals, Subchapter S corporations, fiduciaries and estates, and partnerships, as well as for composite returns. The extension aligns with the extension announced by the U.S. Department of the Treasury and the IRS. The requirement for a written request for an extension is waived.
    • Governor’s Executive Order No. EO 21-06, March 19, 2021.

For more information, reach out to your BKD Trusted Advisor or use the Contact Us form below.

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