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

Thoughtware Alert Published: May 03, 2021 | Updated: Jun 11, 2021

Information current as of May 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 Oklahoma

  • Oklahoma issued guidance on its concurrence with the Internal Revenue Code’s (IRC) treatment of the PPP for loan forgiveness and related expenses. The starting point for computing Oklahoma taxable income is federal taxable income. Oklahoma tax treatment will follow the IRC, except when the Oklahoma Income Tax Act specifically provides otherwise. As the Oklahoma Income Tax Act doesn’t specifically provide otherwise for the treatment of the PPP for loan forgiveness and related expenses, Oklahoma will follow federal treatment for these items.
    • Oklahoma Tax Commission, FAQ Corporate Income Tax; March 17, 2021.
  • Oklahoma released guidance for personal income taxpayers regarding the treatment of unemployment benefits received because of the American Rescue Plan Act of 2021. If a taxpayer hasn’t yet filed federal and/or state returns, they should follow the IRS updated instructions to calculate their modified adjusted gross income and file their federal and Oklahoma return accordingly. Under current law, taxpayers won’t be required to add back any of the nontaxed unemployment benefits in computing their Oklahoma taxable income. If the taxpayer filed their returns before March 15, 2021, they don’t need to do anything. The Oklahoma Tax Commission (OTC) is planning to automatically update taxpayers’ adjusted gross income (AGI) beginning next month. Once their return has been adjusted, taxpayers will receive a letter from the OTC explaining the update, and if they’re entitled to a refund, they can expect an automatic payment. If the taxpayer disagrees with the changes, they may respond to the letter. If the taxpayer filed their return after March 15, 2021, and didn’t report the unemployment exclusion on their federal return, they will need to file an amended return using Form 511X and include an estimated federal Form 1040 and Schedule 1 showing the recomputation of their AGI. It’s not necessary to file the estimated federal 1040 and Schedule 1 with the IRS.
    • Oklahoma Tax Commission, Notice; April 14, 2021.
  • Oklahoma legislation authorizes the Tax Commission to provide a later due date for returns of individuals, corporations, partnerships, and estates and trusts, as well as estimated tax payments, if the governor declares a state of emergency or the IRS postpones filing and tax payment deadlines in disaster areas.
    • Oklahoma S.B. 601, effective May 7, 2021.

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

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