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

Thoughtware Alert Published: May 03, 2021 | Updated: Jul 19, 2021

Information current as of June 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 Washington

  • Washington has amended and extended Proclamations 20-05 and 20-20 concerning sales and use, property, excise, and estate tax relief from penalties, fees, interest, and due dates. The measures include 1) extending statutory waiver or suspension of enforcement of interest and penalties on taxes, along with business licensing provisions, for taxpayers adversely affected by COVID-19; and 2) providing that the extension will remain in force until the termination of the state of emergency or until rescinded, whichever occurs first. 
    • Governor’s Proclamations No. 20-20.11 and 20-56.8; January 19, 2021.
  • Washington updated its tax guidance on COVID-19 financial assistance. Businesses receiving assistance under federal, state, and local programs shouldn’t report or pay business and occupation (B&O) tax for the assistance. The state will delay any final decision on taxability or enforcement actions until after the legislature has had an opportunity to act. No penalties or interest will accrue with regard to any tax that may be due until further notice. Advanced or accelerated payments received in the medical industry must be reported and could be subject to the B&O tax at the time of receipt. 
    • Washington DOR, FAQs Regarding COVID-19; January 1, 2021.
  • Washington is increasing state unemployment benefits and capping unemployment taxes for five years to help businesses and workers suffering from the COVID-19 pandemic’s effects. The new law will 1) expand unemployment benefits to people who are at high risk for contracting COVID-19, or live with others who are at high risk, and quit their jobs during the public health emergency because they can’t work from home; 2) waive some waiting period requirements and increase weekly benefits from 15 percent to 20 percent of average weekly wage; and 3) cap the tax rate employers pay and suspend a 0.02 percent solvency surcharge for 2021 through 2025.
    • Washington S.B. 5061, effective February 8, 2021.
  • Washington legislation exempts the value of pandemic relief loans or grants businesses received since February 29, 2020, from the business and occupation tax, public utility tax, and sales and use tax. Federal PPP and EIDL loans are among the types of assistance that qualify for the exemption if the loans are forgiven.
    • Washington H.B. 1095, effective retroactively to February 29, 2020.
  • Washington legislation requires county treasurers to grant a due date extension for any unpaid, nondelinquent property tax payable in 2021 as relief related to COVID-19. The eligible taxpayer must show a loss of at least 25 percent of its revenue attributable to that real property for calendar-year 2020 compared with calendar-year 2019. A taxpayer must request an extension with forms developed or approved by the department by April 30, 2021. A county treasurer granting an extension must establish a payment plan. Penalties and interest don’t apply to taxes due under the payment plan as long as the eligible taxpayer complies with the terms of the payment plan.
    • Washington H.B. 1332, effective April 16, 2021.
  • Washington will permit filing and payment extensions for Washington estate tax returns where the estates have been negatively affected by the COVID-19 pandemic during the governor’s state of emergency. Extension requests for payments are reviewed on a case-by-case basis. 
    • Washington DOR, Estate Tax Notice; May 1, 2021.
  • Washington clarified the state will waive interest from February 29, 2020, until the termination of the COVID-19 state of emergency or the rescinding of Proclamation 20-20 relating to property, excise, estate, and sales and use tax, when interest will begin accruing on outstanding balances again. Tax returns filed and paid in full by the extended due date are considered timely and won’t incur interest. 
    • Washington DOR, Business Relief During COVID-19 Pandemic; June 21, 2021.

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

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