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 Connecticut
- Connecticut suspended the reapplication filing requirements for the additional veterans’ tax relief program; the homeowners’ elderly/disabled circuit breaker program; and the freeze tax relief program. The municipal requirement to notify taxpayers concerning reapplication requirements by regular mail also is waived. In addition, any individual stimulus payments received during the declared public health and civil preparedness emergencies due to COVID-19 that are excluded under Internal Revenue Code (IRC) Section 6409 for purposes of determining the recipient’s eligibility for benefits or assistance under any program funded in whole or in part with federal funds also will be excluded in all state-funded programs for the duration, including any period of renewal, of the public health and civil preparedness emergencies.
- Governor’s Executive Order 10, February 4, 2021.
- Connecticut has updated guidance on its conformity to the Coronavirus Aid, Relief, and Economic Security Act to provide that Connecticut allows the federal deduction for expenses paid with proceeds of forgiven Paycheck Protection Program (PPP) loans for both corporation business tax and personal income tax purposes. The federal 2021 Consolidated Appropriations Act provides that taxpayers whose PPP loans are forgiven are allowed deductions for otherwise deductible expenses paid with the proceeds of a PPP loan. The starting point in determining an individual’s Connecticut income tax liability is the individual’s federal adjusted gross income. Certain Connecticut modifications are made to arrive at Connecticut adjusted gross income. There’s no Connecticut addition modification for these expenses for Connecticut income tax purposes. Therefore, to the extent that these expense deductions decrease federal adjusted gross income, they will similarly decrease Connecticut adjusted gross income. The result is the same for purposes of the corporation business tax.
- Connecticut DRS, OCG-10; revised February 25, 2021.
- Connecticut legislation extends the credit for taxes paid to other states to workers telecommuting due to the COVID-19 pandemic for the taxable year commencing January 1, 2020. The bill also prohibits the Connecticut Department of Revenue Services from considering the activities of any employees who worked remotely from Connecticut during the 2020 tax year solely due to COVID-19 in determining whether an employer has nexus with Connecticut for any state tax. In addition, the legislation revises the state’s payments in lieu of taxes (PILOT) grants program, effective July 1, 2021.
- Connecticut H.B. 6516, effective March 4, 2021, and as noted.
- Connecticut DRS, Taxpayer Services Special Bulletin 2021-1; March 26, 2021.
- Connecticut is extending the filing and payment deadline for Connecticut individual income tax returns to May 17, 2021, to align with the recently announced extension for federal returns.
- Connecticut Department of Revenue Services; News Release; March 19, 2021.
- Connecticut provided guidance on the exclusion for unemployment compensation on the 2020 federal return enacted by the federal American Rescue Plan Act of 2021. Connecticut will allow the federal unemployment compensation exclusion when calculating Connecticut income tax. As the exclusion took effect after some qualifying taxpayers already filed their 2020 federal returns, the state will issue further guidance pending IRS guidance on its automatic adjustments to income. Taxpayers who already filed their federal and Connecticut returns and expect the IRS to recalculate their return automatically and who aren’t otherwise required to file amended federal returns shouldn’t amend their Connecticut returns at this time.
- Connecticut Department of Revenue Services, Taxpayer Services Special Bulletin 2021-2; April 1, 2021.