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

Thoughtware Alert Published: May 03, 2021 | Updated: Jun 08, 2021

Information current as of April 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 Utah

  • Utah announced it will follow the IRS extension of the individual income tax filing and payment deadline to May 17, 2021. The extension is automatic, and no action needs to be taken to receive it.
    • Utah State Tax Commission, verbal contact with the department; March 19, 2021.
  • Utah provided guidance on state income tax treatment of Paycheck Protection Program (PPP) and similar loan amounts. PPP loan amounts forgiven by the federal government are taxable in Utah if 1) the loan was forgiven during the 2020 tax-year; 2) the value of the loan isn’t subject to federal income tax; and 3) the loan is used for expenses that are deductible for federal income tax purposes. If a nonprofit entity uses forgiven PPP loan amounts to pay for expenses that are deductible against unrelated business income, then the forgiven amounts must be included as unadjusted income. If a forgiven loan isn’t related to paycheck protection and/or COVID-19, the Utah tax treatment will follow the federal treatment for the specific forgiven loan. If a PPP or similar loan isn’t forgiven by the federal government but the loan amount is paid by a grant from the state or a local government, then for tax-year 2020, the amount may be subtracted if included in unadjusted income. If a PPP or similar loan isn’t forgiven by the federal government but the taxpayer uses it to pay for federally deductible expenses, then the loan need not be included in unadjusted income and federally deductible expenses will flow through to the Utah tax return. Finally, if any forgiven PPP loan amount that isn’t subject to federal income tax is used to pay deductible expenses in other states, the amount reportable as income on the taxpayer’s Utah return is subject to apportionment based on the taxpayer’s business activities in the state.
    • Utah State Tax Commission, FAQs about PPP Loans, March 23, 2021.
  • Utah issued guidance for individual income tax treatment of unemployment compensation. Utah law generally conforms to the federal treatment of unemployment compensation. Unemployment compensation up to $10,200 paid in 2020 is excluded from federal adjusted gross income, and an exclusion applies for taxpayers with federal adjusted gross income of less than $150,000. Unemployment compensation, which is excluded for federal tax purposes, will automatically be excluded for Utah tax purposes for taxpayers who haven’t yet filed their federal and Utah returns, and taxpayers who have already filed their federal and Utah returns shouldn’t file an amended Utah return to exclude any unemployment compensation because the commission is exploring options to obtain the necessary information directly from the IRS to adjust taxpayers’ returns and process refunds automatically. 
    • Utah State Tax Commission, FAQs; April 1, 2021.

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

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