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

Thoughtware Alert Published: May 03, 2021 | Updated: Oct 26, 2021

Information current as of September 30, 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 New York

  • Prevents local governments from engaging in certain tax lien sales or foreclosures until May 1, 2021, and further extends the Senior Citizens’ Homeowner Exemption and the Disabled Homeowner Exemption to the 2021 assessment roll (at the same level) without requiring recertification.
    • S.B. 9114 (c. 381), Laws 2020, effective December 28, 2020.
  • New York issued guidance that the state would follow a feature of the Coronavirus Aid, Relief, and Economic Security Act that excludes forgiven Paycheck Protection Program loans from adjusted gross income. New York also clarified if the expenses related to the forgiven loan are deducted in computing federal adjusted gross income, these deductions are automatically excluded from New York adjusted gross income.
    • New York Department of Taxation and Finance, FAQs; January 14, 2021.
  • New York legislation provides that unemployment insurance benefits paid in connection with COVID-19 won’t be charged to employer accounts for experience rating purposes. This relief applies to unemployment insurance claims that are due to the closure of the employer, a reduction in the employer’s workforce due to COVID-19, or a governmental order to close the business due to COVID-19. The noncharging provision also applies to reimbursing employers (nonprofit and governmental employers) to the extent allowed under federal law. Prior to enactment, the New York Department of Labor took the position that the only COVID-19 unemployment insurance benefits that wouldn’t be charged to employer accounts were those reimbursed to the state’s trust fund by the U.S. Department of Labor, making it unclear whether regular benefits paid in connection with COVID-19 would be charged to employers’ accounts for experience rating purposes.
    • New York S.B. 1197, passed January 28, 2021; retroactively effective to March 12, 2020, and is repealed after December 31, 2021.
  • New York has extended the due date for personal income tax returns and related tax payments for the 2020 tax year from April 15, 2021, to May 17, 2021. The relief doesn’t apply to estimated tax payments for the 2021 tax year that are due on April 15, 2021.
    • New York Department of Taxation and Finance, Important Notice N-21-1; March 19, 2021.
  • New York adopted provisions concerning the administration of the Excelsior Jobs Program due to the COVID-19 pandemic. The revised rule includes these measures: 1) allowing program discretion for affected businesses, deferring 2020 commitments and benefits to 2021 if there’s sufficient evidence to prove the negative effect of the state of emergency; 2) effectively extending the preliminary schedule of benefits an additional year by means of the deferral; and 3) setting the discretion expiration date as the later of December 31, 2020, or the expiration of the governor’s executive order declaring the state of emergency. 
    • New York Department of Economic Development, Emergency N.Y. Comp. Codes R. & Reg. tit. 5, §197.1; effective March 22 through June 19, 2021.
  • New York announced that any unemployment compensation that’s excluded from federal gross income must be added back when filing the New York personal income tax return. The Department of Taxation and Finance has updated Form IT-558, New York State Adjustments due to Decoupling from the IRC, to report the addback as adjustment code A-011.
    • New York Department of Taxation and Finance, Notice; April 8, 2021.
  • New York announced the continuation of middle-class tax cuts to help taxpayers recover from economic hardship during the COVID-19 pandemic. The state budget provides an individual income tax credit for resident homeowners with incomes up to $250,000 if their total property tax exceeds a fixed percentage of their income. The calculation of the credit is capped at $350 per STAR-eligible household while also using a $250 credit minimum to further target homeowners affected the most by high property taxes. Qualified homeowners will be able to claim the new property tax relief credit for taxable years 2021, 2022, and 2023. In the current tax year, income tax rates have been lowered to 5.97 percent from 6.09 percent for taxpayers filing jointly in the $43,000 to $161,550 income bracket. 
    • New York S.B. 2509, Special Session, effective April 19, 2021.
    • New York Governor’s Office, Press Release, April 19, 2021.
  • New York legislation extends the temporary stay on certain tax foreclosures or tax lien sales to August 31, 2021, for those proceedings that have been, or could be, commenced before that date under the COVID-19 Emergency Eviction and Foreclosure Prevention Act of 2020.
    • New York S.B. 6362, effective May 5, 2021.
  • New York legislation permits small businesses with up to 100 employees, or 500 employees if the business was closed for a two-week period between May 15, 2020, and May 1, 2021, to submit a hardship declaration under the COVID-19 Emergency Protect Our Small Businesses Act of 2021 for a temporary stay on foreclosures and tax lien sales.
    • New York A.B. 7127, effective March 9, 2021.
  • New York legislation excludes grants received from the COVID-19 pandemic small business recovery grant program from AGI to the extent they’re includable in federal taxable income. 
    • New York A.B. 7230, effective June 25, 2021, and applies to taxable years commencing on or after January 1, 2021.
  • New York COVID-19 legislation prevents the foreclosure of delinquent taxes or the sale of tax liens on commercial property until January 15, 2022, provided the owner or mortgagor owns 10 or fewer commercial units directly or indirectly, submits a hardship declaration, and meets other criteria.  Similarly, it also prevents the foreclosure of delinquent taxes or the sale of tax liens on residential property until January 15, 2022, provided the owner or mortgagor is a natural person, owns 10 or fewer dwelling units directly or indirectly, submits a hardship declaration, and meets other criteria. 
    • New York S.B. 50001, effective September 2, 2021.

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

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