Information current as of August 31, 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 Maryland
- Maryland has provided COVID-19 pandemic tax relief for 2021 businesses filing tax returns and payments. Most tax filings and payments coming due in January to April 2021 are now due April 15, 2021. If the IRS extends its April 15, 2021, filing deadline for 2020 corporate, pass-through entity, and individual income tax returns, Maryland will conform to the IRS action.
- Maryland Tax Alert 01-06-21; January 6, 2021.
- Maryland legislation provides corporate and personal income tax relief due to COVID-19. For tax years 2020 and 2021, a subtraction from federal adjusted gross income (individuals) or from federal taxable income (corporations) is enacted for coronavirus relief payments received during the taxable year, including state economic impact payments authorized under the Recovery for the Economy, Livelihoods, Industries, Entrepreneurs, and Families Act (RELIEF Act). The subtraction also includes any coronavirus relief loan payments that have been forgiven. In addition, for tax years 2020 and 2021, unemployment insurance benefits may be subtracted from income if the taxpayer’s federal adjusted gross income for the taxable year doesn’t exceed $75,000 for an individual or $100,000 for married couples filing jointly, heads of household, or surviving spouses. Finally, for tax years 2020, 2021, and 2022, the law increases the refundable earned income tax credit to 45 percent for families and 100 percent for individuals without qualifying children.
- Maryland S.B. 496, Laws 2021, effective February 15, 2021.
- Maryland provided additional guidance regarding the RELIEF Act. The purpose of the emergency bill is to relieve some of the adverse economic effects of the COVID-19 pandemic. The alert includes information on 1) changes to the filing of individual income and corporate income taxes; 2) the issuance of Maryland economic impact payments to certain individuals, which won’t be subject to Maryland tax but might be subject to federal income tax; 3) an alternative credit provided by the act against the gross amount of sales and use tax owed by some vendors; 4) extended sales and use tax return filing deadlines and changes to the pass-through entity tax election; and 5) the tax treatment of COVID-19 relief measures, such as grants and loans.
- Maryland Comptroller of the Treasury, Tax Alert 02-16-21; February 16, 2021.
- Maryland updated its guidance on the RELIEF Act. The comptroller previously listed incorrect dates of when the Maryland Department of Labor will provide the comptroller with lists of individuals qualifying for the $1,000 Recovery Now Fund grant relating to unemployment benefits claims. The correct dates are April 5, 2021; May 5, 2021; June 3, 2021; and July 6, 2021.
- Maryland Comptroller of the Treasury, Tax Alert 03-04-21A; March 4, 2021.
- Maryland is extending due dates to July 15 for individual, corporate, pass-through entity, and fiduciary income tax returns that are due on varying dates between January 1 and July 15. It’s also extending the due date to July 15 for sales and use tax returns for sales taking place in March, April, and May. Interest and penalty for late payment of tax is automatically waived if income tax, sales tax, and tobacco floor tax are paid by July 15.
- Maryland Comptroller of the Treasury, Tax Alert 03-11-2021, March 11, 2021.
- Maryland announced that because of possible legislation clarifying the scope of sales and use tax on digital products, changes in the RELIEF Act, and time needed to produce revised tax forms, returns for sales taking place in March, April, and May 2021 are now due on July 15, 2021. The Maryland General Assembly overrode Gov. Hogan’s veto of a bill imposing sales and use tax on digital products and codes. Maryland began collecting sales and use tax on those products on March 14, 2021. In response, the Comptroller issued guidance to help with compliance. However, since there are concerns with the taxability of online classes and other digital products, corrective legislation is being considered. If legislation is passed, further guidance will be issued and appropriate refund claims will be processed.
- Maryland Comptroller, Sales and Use Tax Bulletin 21-1; March 29, 2021.
- Maryland issued guidance on the state tax effect of the federal 2021 Consolidated Appropriations Act (CAA) stating the state conforms to all provisions of the CAA unless legislative action is taken to specifically decouple. This guidance specifically mentions conformity to the federal provisions for 1) the permanent extension of the itemized medical expense deduction; 2) the shortened depreciation recovery period for residential rental property placed into service prior to January 1, 2018; 3) the temporary deduction for 100 percent of business meals in calendar years 2021 and 2022; 4) the deduction of business expenses paid for with Paycheck Protection Program loans; and 5) the temporary lookback to 2019 income to calculate 2020 federal-earned income tax credits.
- Maryland Comptroller, Tax Alert; April 7, 2021.
- Maryland issued updated guidance regarding the RELIEF Act and the federal American Rescue Plan Act of 2021, which provides that if a taxpayer’s adjusted gross income doesn’t exceed $150,000, up to $10,200 of unemployment compensation per individual taxpayer may be excluded from federal adjusted gross income. Any amount of unemployment compensation in excess of $10,200 that is included at the federal level is eligible for the subtraction at the Maryland level, subject to Maryland’s income caps for the subtraction. Taxpayers who qualify for the federal exclusion but don’t qualify for the Maryland subtraction don’t need to add back the amount excluded from federal adjusted gross income, as the exclusion flows to the Maryland return.
- Maryland Comptroller, Tax Alert; April 20, 2021.
- Maryland legislation authorizes the mayor and city council of Baltimore City or governing body of a county or municipal corporation to grant a property tax credit for real or personal property owned or leased by COVID-19-affected business entities.
- Maryland H.B. 1137, applicable to taxable years beginning after June 30, 2021.
- Maryland S.B. 887, applicable to taxable years beginning after June 30, 2021.
- Maryland informed taxpayers that it will resume its tax collection activities as of August 16, 2021. Activities that will resume include, but are not limited to, offsets of state and federal income tax refunds, license holds, audit and collection activities, including the issuing of liens, offsets of state vendor payments, and resumption of pre-pandemic payment agreements. Some taxpayers may receive notices from the Comptroller’s Office prior to August 16, but these notices will be limited to those circumstances where legal action is required earlier than August 16 to protect the interests of the state of Maryland.
- Maryland Comptroller, Tax Alert; August 3, 2021.