February Corporate State Tax Updates – February 2021

By Georgia Lo

The following are recent significant State Corporate Tax developments for the month of February 2021 that may be of interest to estate and business planners, organized by state.


  • House Bill 170, signed on February 12, 2021, provides new tax provisions in Alabama, including:
    • Changing the apportionment factor to a single sales factor;
    • Retroactively decoupling from federal law 26 U.S.C. § 951A relating to Global Intangible Low-Taxed Income (GILTI) and 26 U.S.C. § 118(b)(2); 
    • Changing how a corporation limits its business interest expense deduction; and
    • Providing that an Electing Pass-Through Entity shall be taxed at the entity level rather than its owners, members, or shareholders [H.B. 170].

House Bill 170 also designates three separate acts:

  • Act 1: The Alabama Taxpayer Stimulus Freedom Act of 2021 excludes any federal credits, refunds, and other benefits or payments from the federal CARES Act from individual taxation, and excludes any amounts received from the Coronavirus Relief Fund and loans forgiven under the Paycheck protection Program (PPP) from income taxation and financial institution excise tax.
  • Act 2: Changes the state apportionment factor to a single sales factor formula, eliminates the “throwback” rule in the sales factor, retroactively decouples from federal GILTI provisions, and provides that if no section 163(j) interest limitation exists at the federal level, there will be no limitation for state purposes.
  • Act 3: Allows pass-through entities to elect to be taxed at the entity level, rather than the owner level. 


  • On January 14, 2021, the California Franchise Tax Board (FTB) issued a Summary of Federal Income Tax Changes to explain hot the state decouples from the following federal provisions under the CARES Act (PL 116-136):
    • Internal Revenue Code (IRC) §172: Regarding NOLS, the FTB explains that California has not conformed to federal changes that apply to taxable years beginning after December 31, 2017
      • NOLs attributable to taxable years beginning on or after January 1, 2008 may be carried forward for twenty years.
      • NOLs may not be carried back for taxable years before January 1, 2013 and after December 31, 2018.
      • California conforms to the federal NOL carryback rules for NOLs attributable to taxable years beginning on or after January 1, 2013, and before January 1, 2019, with modifications.
      • The 80 percent taxable income limitation is not applicable and any NOL arising in a taxable year beginning after December 31, 2017 and before January 1, 2021 may not be carried back. 
    • IRC §163(j): Regarding business interest expense limitations, California conforms to the federal rules for the deduction of interest as of the specified date of January 1, 2015, with modifications, but does not conform to the federal limitations on deductions of business interest, and does not conform to the federal modification of the limitations on business interest.
    • IRC §461(l): Regarding limitations on excess business losses for non-corporate taxpayers, California has modified conformity for taxable years beginning after December 31, 2018:
      • For state purposes, losses are treated as an excess business loss carryover to the following taxable year rather than a net operating loss carryover under IRC §172, and thus California does not conform to the federal changes in Section 2304 of PL 116-136.
    • IRC §168(e): Regarding cost recovery for qualified improvement property (QIP), California does not conform to the federal definition and classification of QIP and federal modifications to provide a general 15-year recovery period for QIP. As a result, technical amendments regarding qualified improvement property are not applicable.


  • On January 21, 2021, the Colorado DOR updated its guidance on corporate income tax, specifying the following:
    • Nexus: A corporation organized outside of Colorado has substantial nexus for any tax period in which the corporation’s property, payroll, or sales within the state exceed: $50,000 of property, $50,000 of payroll, or $500,000 of sales
    • C corporations have substantial nexus with Colorado for any tax period in which 25% or more of the C corporation’s total property, total payroll, or total sales are in Colorado. The DOR has provided a table of thresholds for establishing substantial nexus in the state (3).
    • Combined Returns: A C corporation must be included in a combined return if:
      • It is a member of an affiliated group of C corporations (consists of one or more chains of C corporations connected through stock ownership with a common parent C corporation, which must directly own stock possessing more than 50% of each class of the nonvoting stock of a t least one of the other C corporations included in the group);
      • Less than 80% of its property and payroll is assigned to locations outside of the United States; and 
      • It satisfies at least three of the six tests of unity for the current and two preceding tax years (6). 

Members of an affiliated group of C corporations may elect to make a consolidated return instead of filing separate returns. A consolidated return may only include C corporations doing business in Colorado, and may only be filed if all corporations which have been members at any time during the taxable year consent to be included in the return.

  • NOLs: A Colorado NOL generally may be carried forward for up to 20 years if it originated in:

A tax year commencing prior to January 1, 2018; or

A tax year commencing on or after January 1, 2021.

NOLs originating in tax years between the above dates may be carried forward for an unlimited number of years, and may not be carried back to any prior year. 

The deduction of any Colorado NOLs arising in any tax year beginning after December 31, 2017 may be subject to other limitations. [Colorado Corporate Income Tax Guide, Colo. Dept. of Rev. (rev. 1/21)].


  • On February 18, 2021, H.B. 58 was signed into law, updating Idaho’s conformity to federal Internal Revenue (IRC) provisions as in effect on January 1, 2021. This law decouples from the current version of IRC §461(l) involving excess loss limitations for taxpayers other than corporations, and instead conforms to IRC §461(l) as in effect on January 1, 2020 [H.B. 58, signed by gov. 2/18/21].
  • On February 22, 2021, the UC Supreme Court denied the review of a case involving unitary business relationships and pass-through entities. This petition followed an Idaho Supreme Court decision affirming that an out-of-state company’s gain from sales of its ownership interest in an Idaho-based LLC constituted nonbusiness income. The decision concluded that the gain did not meet the definition of “business income.” The Idaho State Tax Commission, in its petition, claimed that other state courts have not decided whether superficial aspects of a pass-through entity’s business can determine unity. [Docket No. 20-947, US (cert denied 2/22/21)].


  • The Indiana Department of Revenue released a bulletin listing several provisions to which Indiana does not conform for state income tax purposes, including Internal Revenue Code sections 163(j), 172, 461(l), and 168. Such IRC references reflect the federal income tax law in effect on January 1, 2020. 
    • Regarding CARES Act Section 2306 involving the business interest expense deduction under IRC section 163(j), Indiana decoupled from IRC section 163(j) in 2018, allowing the full amount of the deduction, and continues to allow a full deduction. Additionally, the amount to be reported as an addback remains “as the federal interest allowable” after limitation minus interest otherwise deductible for that taxable year.” 
    • Indiana does not conform to the federal tax law changes under CARES Act Section 2303, regarding IRC section 172 net operating losses (NOLs), and does not follow the treatment involving the loss limitation for individuals, estates and trusts under IRC section 461(l). Indiana taxpayers are instead required to:
      • Add back the amount of any current-year excess loss that would have been disallowed for federal purposes in determining Indiana adjusted gross income, and
      • Add this disallowed amount to the individual’s current year NOL available for carryover for future years. 
    • Regarding CARES Act Section 2307 involving qualified improvement property and IRC section 168 depreciation, Indiana will continue to treat CIP as being subject to a 39-year life span. The definition of QIP for Indiana purposes follows the current definition under IRC section 168(e).


  • On Jan 26, 2021, Kansas Governor Laura Kelly issued an executive order providing the following updates:
    • For the period between March 13, 2020 and December 31, 2020, for wages paid to employees who are temporarily teleworking in a state outside of their primary work location, employees may continue to withhold income taxes based on the employee’s primary work location rather than the state in which the employee is working during the COVID-19 pandemic; and
    • On and after January 1, 2021, employers must comply with K.S.A. 79-3296, and “make all necessary adjustments to withhold from wages whenever the wage recipient is a Kansas resident or the wages are paid on account of personal services performed in Kansas.”

These provisions are in effect until the earlier of its recession or of the expiration of the State of DIsaster Emergency  and as extended by any subsequent enactment or resolution. This order does not affect any other regulations regarding filing requirements in the Kansas income tax act  (K.S.A. 79-3201) and the Kansas withholding and declaration of estimated tax act (K.S.A. 79-3294) [Executive Order No. 21-01, Kan. Off. of the Gov.].


  • On December 30, 2020, the Louisiana First Circuit Court of Appeal held that gains derived from the sale of a limited liability company (LLC) interest should be included in the denominator of a taxpayer’s Louisiana corporate income tax sales factor.

In the previous decision, the taxpayer included the gain in the denominator of the Louisiana revenue ration as “other apportionable income” on its 2011 Louisiana Corporate Income Tax Return. The Louisiana Department of Revenue (DOR) removed the gain from the denominator, stating that “sales not made in the regular course of business are not included” in the revenue ratio in accordance with statute “L.A.C. §1134(D)”. The Court of Appeal found that the legislature “did not intend to exclude sales not made in the regular course of business,” and vacated the DOR’s assessment. [Davis-Lynch Holding Co. v. Robinson, 2019-1574, 2020 La. App. LEXIS 1932, 2020 WL 7766314 (La. App. – 1st Cir., Dec. 30, 2020)].


  • On January 27, 2021, the Massachusetts Appeals Court affirmed a state Appellate Tax Board, holding that a corporate excise taxpayer’s receipts derived from federal litigation (including damages, settlement payments, and royalty payments) enforcing the taxpayer’s patent rights were properly included in the sales factor and, because the taxpayer was commercially domiciled in Massachusetts during that time, were sourced to the state. The Court found no error in the board’s refusal to treat the litigation proceeds as licensing fees, and defers to the board’s conclusion that the royalty payments were gross receipts from the enforcement of legal rights, as the taxpayer would not have received the royalty payments but for the enforcement of its legal rights [Case No. 19-P-1695, Mass. Ct. App. (1/27/21)].
  • On February 12, 2021, the Massachusetts Department of Revenue released a Draft Technical Information Release (TIR) explaining the following provisions included in the Fiscal Year 2021 Budget relating to partnerships that are the subject of a federal audit:
    • Requiring audited partnerships to amend their Massachusetts nonresident composite returns or withholding reports;
    • Allowing audited partnerships to make an election to pay state tax on behalf of their partners; and
    • Require partners in an audited partnership to directly pay state tax in certain instances.

In some cases, a partner may have an adjustment resulting from a partnership-level audit that the partner has reported for federal tax purposes on either an amended income tax return or otherwise prior to the effective date of the act, and those partners may have to report and pay tax with respect ot the adjustment to the state within 180 days of the effective date [Working Draft TIR: Tax Provisions in the Fiscal Year 2021 Budget, Mass. Dept. of Rev. (2/12/21)].

  • On February 12, 2021, the Massachusetts Department of Revenue released a working draft directive assisting individuals who telecommuted in 2020 due to the COVID-19 pandemic with their 2020 personal income tax returns. This working draft directive applies to:
    • Non-resident telecommuting employees: Non-residents who worked in Massachusetts prior to the Massachusetts COVID-19 state of emergency , but began working remotely outside of the state due to a “Pandemic-Related Circumstance”, and
    • Resident telecommuting employees: Residents who worked in another state prior to the state of emergency, but began working remotely from a location within the state due to a “Pandemic-Related Circumstance.”

The directive does not apply to the sourcing of wage income of employees earned from a new job commencing after March 10, 2020. Non-resident telecommuting employees who worked in Massachusetts prior to the state of emergency and later telecommuted from locations outside of the state must continue to source their wages earned from such subsequent employment to Massachusetts. Non-resident employees who apportioned their wages to Massachusetts prior to the state of emergency “must determine the amount of their wages that is Massachusetts source income based on either the percentage of their work days spent in Massachusetts during the period January 1 through February 29, 2020, or the apportionment percentage properly used to determine the portion of their wages from that employer that constituted Massachusetts source income as reported on their 2019 personal income tax return.” Resident telecommuting employees will be eligible for a credit for taxes paid to that other state if the other state applies similar sourcing rules [Working Draft Directive: Personal Income Tax Guidance for Employees who Telecommuted in 2020 due to the COVID-19 State of Emergency, Mass. Dept. of Rev. (2/12/21)].


  • The Minnesota Department of Revenue released a bulletin on February 17, 2021, including guidelines for pandemic-related telecommuting. The bulletin explains that employees who normally work in one state but live in another state, but are now working from home due to the COVID-19 pandemic, may have received Forms W-2 with improperly allocated wages. Such wages will need to be allocated based on the number of days an employee worked while in their home state, since wages should be allocated to the state in which work was physically performed. If an employee receives an underpayment penalty due to this incorrect allocation, they may request an abatement of penalty [Bulletin: How to handle incorrect wage allocation on 2020 Forms W-2, Minn. Dept. of Rev. (2/17/21)].


  • On February 16, 2021, the Missouri Department of Revenue proposed a permanent rule regarding the COVID-19 pandemic which modifies the manner in which the amounts to be withheld by certain employers for employees performing services for wages from a temporary work location are calculated during a defined period. With regard to “services performed by an employee after the declaration date and prior to the earlier of the time at which an employer began withholding based on a time and attendance system for such employee or the end of the COVID-19 relief period, each employer may elect to withhold income tax from wages paid to such employee as if such wages were earned from work performed at the employee’s primary work location, despite such employee working from a temporary work location during the COVID-19 relief period.” [Proposed Permanent 12 CSR 10-2.019 Determination of Withholding for Work Performed at Temporary Work Location, Mo. Dept. of Rev. (2/16/21)].


  • On February 10, 2021, the Montana Department of Revenue released a “special message” for  anyone living in Montana for any time in 2020 and worked remotely, including those who temporarily relocated due to the COVID-19 pandemic, noting that these taxpayers “must pay Montana state income tax on any wages received for work performed while in Montana, even if your job is normally based in another state.” [A Special Message for Remote Workers in Montana, Mont. Dept. of Rev. (2/10/21)].


  • On February 17, 2021, the Nebraska Department of Revenue issued a revenue ruling addressing  the state’s treatment of federal Subpart F income, stating that “subpart F income is not categorically a dividend or deemed dividend. However, these portions of Subpart F income that are dividends or deemed dividends can be deducted from federal adjusted gross income or federal taxable income pursuant to the Nebraska dividend and deemed dividend deduction.” The following Subpart F inclusions are specifically deemed to be dividends in the IRC:
    • IRC § 964(e)(4) gains on the sale or exchange by a CFC of stock in another foreign corporation;
    • IRC § 245(e)(2) hybrid dividends; and 
    • IRC § 954(c)(1)(A) Foreign Personal Holding Company dividends. 

Because Nebraska law follows the IRC’s dividend designations, the gross income reported under these subsections are dividends or deemed dividends for purposes of the Nebraska dividend and deemed dividend deduction provided in Neb. Rev. Stat 77-2716(5). Additionally, the Nebraska DOR states that for apportionment purposes, “if a corporate taxpayer is taxable in Nebraska and one or more other states, the income of the corporate taxpayer must be apportioned to Nebraska based on the Nebraska receipts as compared to all receipts as provided by Neb. Rev. Stat. §§ 77-2734.05 to 77-2734.15” [Revenue Ruling 24-21-1, Neb. Dept. of Rev. (2/17/21)].

New Hampshire:

  • On February 12, 2021, the New Hampshire Department of Revenue Administration finalized several proposed rules to implement H.B. 4 enacted in 2019, regarding state business profit tax (BPT) and state business enterprise tax (BET). This legislation includes provisions that determine when sales other than sales of intangible personal property are derived from sources within New Hampshire for apportionment purposes under the BPT and BET, moving from a “costs of performance” sourcing method to a market-based method, and including a sales factor “throw out” rule [Conditional Approval: Rev 300 various; Rev 2400 various, N.H. Dept. of Rev. Admin. (2/12/21)].

New Jersey:

  • On January 26, 2021, the New Jersey Superior Court, Appellate Division, affirmed that the business liquidation doctrine did not apply to the gain from the sale of two business assets, classifying the gain as taxable apportionable operational income. Additionally, the Court agreed that the sale of certain rights did not constitute a complete or partial liquidation of the taxpayer’s business, because the taxpayer continued to own other patents and trademarks following the consummation of the transaction, and thus the business was clearly comprised of more than just one business asset. The Court concurred with the conclusion that the business’s strategy to effectuate an increase in revenue by reducing its debt load and selling portions of its assets, thereby reinvesting its sale proceeds into the business rather than being distributed to shareholders, does not fall within the liquidation exception [Case No. A-4962-18T2, N.J. Super Ct., App. Div. (1/26/21)].
  • On February 8th, 2021, The New Jersey Division of Taxation released Tax Bulletin (TB) 101, related to Corporation Business Tax (CBT) and the income reporting and accounting methods for non-U.S. corporations that are included as members of a combined group filing a New Jersey COmbined Return where a member of the combined group is a non-U.S. corporation that only uses the International Financial Reporting Standards (IFRS) for financial and tax purposes. The income of a non-U.S. corporation is required to be determined on the basis of “accounting principles generally accepted in the United States” or in a manner that “reasonable approximates income” under the CBT. The Division will accept IFRS as an acceptable method of accounting, if that is the only method of accounting the specific entity uses, as converting to U.S. GAAP (Generally Accepted Accounting Principles) would be difficult. Taxpayers will normally either use IFRS or GAAP, not both or parts of both, and taxpayers may not deviate from their accounting method used for federal purposes [TB-101: Income Reporting and Accounting Methods of Non-US Corporations Members of a Combined Group, N.J. Div. of Tax. (2/8/21)].

New Mexico: 

  • On January 26, 2021, the New Mexico Taxation and Revenue Department proposed new and amended rules involving state corporate income tax. These proposals reflect a change in the requirements for corporations to file a consolidated return, requiring combined reporting for a unitary group on taxable income as a worldwide combined group unless they properly elect to report and pay tax on taxable income as a water’s-edge or consolidated group on the first original return required to be filed on or after January 1, 2020. The proposal also reflects an amendment determining in-state sales of intangibles and services based on market sourcing rather than cost of performance. A public hearing will be held on the proposed rule changes on February 25, 2021 through the internet, email, and telephonic means due to COVID-19 concerns. Written comments on the proposals can be submitted by email to policy.office@state.nm.us or by mail to the Taxation and Revenue Department, Tax Information and Policy Office [Proposed N.M. Regs. sections,, et al. through, N.M. Tax. & Rev. Dept. (1/26/21)].

New York:

  • In a recently updated memo, the New York City Department of Finance describes the city’s decoupling from certain business tax provisions of the federal CARES Act related to: 
    • Banking Corporation Tax (BTX), Unincorporated Business Tax (UBT), General Corporation Tax (GCT), and Business Corporation Tax (BCT): If any of the previously mentioned taxpayers has already filed their 2019 or 2020 business tax returns with the City and reflected the “Entire Net Income” increase in federal deduction as allowed by Internal Revenue Code (IRC) section 163(j)(10), it must file an amended return.
      • If a GCT, UBT, or BTX taxpayer has already filed their 2018, 2019, or 2020 business tax returns with the City with the application of CARES Act amendments to IRC section 172 (for completion of Net Operating Loss deductions), it must file an amended return.
      • If a UBT taxpayer has already filed a 2018, 2019, or 2020 business tax return with the City and did not add back increases in federal deductions allowed by the CARES Act amendments to IRC section 461(l) to their federal gross income, it must file an amended return. 
  • The New York City Department of Finance released Finance Memorandum 20-6, which explains that due to the City’s decoupling from CARES Act changes to IRC sections 163(j), 172, and 461(l), some business taxpayers may see an increase to the City tax liability. Due to the City’s decoupling of these provisions, taxpayers may have to file an amended return. Amended returns should be filed using the instructions in Finance Memo 20-6, which provides guidance on procedures and potential penalty abatement [Finance Memorandum 20-6, N.Y.C. Dept. of Fin. (rev. 1/27/21)].
  • The New York City Department of Finance recently released Finance Memorandum 18-9, reflecting the federal Tax Cuts and Jobs Act provisions of the Internal Revenue Code (IRC) and discussing treatment of: 
    • Foreign-Derived Intangible Income Deduction: For federal tax purposes, a U.S. domestic corporation taxed as a C corporation is allowed to deduct a portion of its income derived from serving foreign markets. The City decouples from the federal FDII deduction for tax years beginning on or after January 1, 2017 [IRC § 250(a)(1)(A); Administrative Code § 11-652(8)(b)(21)].
    • Global Intangible Low-Taxed Income (GILTI): A U.S. shareholder of any controlled foreign corporation (CFC) is required to include its GILTI in gross income. A U.S. domestic corporation taxed as a C corporation is allowed a deduction for a portion of its GILTI, which includes amounts earned directly by the U.S. shareholder as well as distributive shares of GILTI from flow-through entities. 
      • Taxpayers are required to attach a copy of their federal or pro-forma Form 8992, 8993, and Schedule I-1 of Form 5471, along with any accompanying worksheets used to compute GILTI to their New York City tax return. 
      • If the stock of a foreign corporation that generates GILTI is business capital, the net GILTI income needs factor representation in the business allocation percentage (BAP). Net GILTI income must be included in the denominator of the BAP, not the numerator [Finance Memorandum 18-9, N.Y.C. Dept. of Fin. (rev. 2/11/21)]. Taxpayers must report this amount in the Everywhere column of Form NYC-2.5 or NYC Form 2.5-A for tax years beginning before January 1, 2019. For tax years beginning on January 1, 2019 and thereafter, taxpayers must report this amount in the Everywhere column of Form NYC-2.5, Line 53b, or Form NYC-2.5A, line 53c, and attach a statement to the return indicating the GILTI amounts included.
    • Repatriation Amounts Under the Business Corporation Tax: The Tax Cuts and Jobs Act required taxpayers to recognize mandatory deemed repatriation income as Subpart F income, recognizing post-1986 accumulated earnings, profits, and deficits of specified foreign corporations under IRC § 965(a) and (b). Taxpayers are allowed to deduct a portion of the IRC §(a) inclusion amount under IRC § 965(c), resulting in a net IRC § 965 amount. This includes amounts earned by U.S. shareholders and their distributive shares of IRC § 965 amounts from flow-through entities. 
      • For tax years beginning on or after January 1, 2017, the IRC §195(a) inclusion amount received from both unitary and non-unitary corporations not included in a combined return is considered gross exempt controlled foreign corporation (CFC) income, but is never considered gross investment income [Finance Memorandum 18-9, N.Y.C. Dept. of Fin. (rev. 2/2/21)].
  • The New York City Department of Finance recently released Finance Memorandum 18-10, providing additional instructions for reporting GILTI, FDII, and IRC section 965 amounts on City returns and attachments [Finance Memorandum 18-10, N.Y.C. Dept. of Fin. (rev. 2/2/21)].


  • The Nevada Department of Taxation has announced that the state’s tax amnesty program will be running from February 1, 2021 to May 1, 2021. This program applies to sales and use tax, property tax that is centrally assessed, modified business tax (MBT), and commerce tax, in addition to other taxes and fees. Qualifying taxpayers may receive a waiver of underlying interest and penalties for participation in this program. 


  • In an order following the 2018 Oregon Supreme Court decision in Comcast Corp. v. Dept. of Rev., the Oregon Tax Court ruled in favor of the taxpayer regarding the application of Oregon’s special industry “audience ratio” apportionment for interstate broadcasters. Additionally, the order addresses nonbusiness income classification of certain dividends and gains from stock holdings.
  • The City of Portland, Oregon, Revenue Division issued guidance on a new voter-approved business profits tax and “high earners” personal income tax, which became effective January 1, 2021. This measure includes two separate taxes: a 1% personal income tax on taxable income above $125,000 for individuals and $200,000 for those filing jointly, and a 1% business income tax on net income for businesses with gross receipts above $5 million [Supportive Housing Services Income Tax, City of Portland, Oregon, Revenue Division (2/21)].
  • On February 12th, the Oregon Tax Court addressed the treatment of a unitary taxpayer’s unsubtracted 20% portion of its Subpart F income and dividends in computing the group’s sales factor. The Court determined that the unsubtracted portion of the income should not be included in the sales factor denominator, but did not conclude as to whether to include dividends received from CFC [Oracle Corporation and Subsidiaries v. Department of Revenue, No. 5340, Oregon Tax Court (Dec. 16, 2020)].


  • The City of Philadelphia Department of Revenue has announced that for city business income and receipts tax (BIRT) purposes, Philadelphia generally:
    • Conforms to the CARES Act amendment to IRC section 163(j) for tax years beginning in 2019 and 2020, and the special rules for partnerships; and 
    • Decouples from the federal 100% bonus depreciation deduction allowed for Qualified Improvement Property (QIP) acquired and placed into service between September 27, 2017 and January 1, 2023 (non-inclusive), under IRC section 168.
    • Philadelphia generally does not conform to federal treatment of NOLs for BIRT purposes, with respect to IRC section 172, as it is required by law to conform to the Commonwealth of Pennsylvania rules on federal bonus depreciation [Philadelphia’s treatment of certain business tax provisions as a result of the Coronavirus Aid, Relief, and Economic Security (CARES) Act and The Consolidated Appropriations Act, 2021, City of Philadelphia Dept. of Rev. (2/1/21)].
  • The Pennsylvania Department of Revenue is offering a 90-day Voluntary Compliance Program, which runs through May 8th, 2021, for any business with inventory or stores property in the state but that is not registered to collect and pay Pennsylvania taxes. This program also offers a limited lookback period, and taxpayers choosing to participate in the program will not be liable for taxes owed prior to January 1, 2019. Additionally, taxpayers will be given penalty relief for non-compliance for past due tax returns that were not filed, and for taxes that were not paid [Voluntary Compliance Program For Retailers With Inventory in Pennsylvania, Penn. Dept. of Rev. (2/21)].

Rhode Island:

  • On February 4, 2021, the Rhode Island Division of Taxation administratively ruled that a healthcare technology services company that services Rhode Island patients as both retail pharmacy and call center cases may specifically source revenue in proportion to the percentage of retail pharmacy cases and call center cases as “services delivered electronically through or on behalf of an individual or business customer” where the recipient receives the benefit of the Services in Rhode Island. The portion of a taxpayer’s Services revenue from Retail Pharmacy Cases “should be sourced for sales factor purposes based on the state-by-state distribution of cases served because the benefit of the Service is received in the state from which a case arises.” If the taxpayer cannot determine the state where the services are delivered, the taxpayer can reasonably approximate market sourcing based on where the Taxpayer pays its fees to the call centers [Ruling Request No. 2021-01, R.I. Div. of Tax. (2/4/21)]. 

South Dakota: 

  • A new law, signed on February 1, 2021 and effective on July 1, 2021, updates conformity to statutory references to the Internal Revenue Code (IRC) in effect from January 1, 2020 to January 1, 2021, for state financial institution franchise tax purposes [S.B. 40].


  • The Texas Comptroller of Public Accounts recently made a number of revisions in response to the United States Supreme Court decision in South Dakota v. Wayfair Inc. (2018), with a change to the proposed text from the December 4th, 2020 issue of the Texas Register. These updates include an economic nexus for foreign taxable entities “if during that federal income tax period, it had gross receipts from business done in Texas of $500,000 or more,” and further explains that “gross receipts means all revenue reportable by a taxable entity on its federal return, without deduction for the cost of property sold, materials used, labor performed, or other costs incurred.” 

Other amendments include a rephrasing of the language in subsection (d)(12)(B) of the Texas Administrative Code title 34 §3.586, replacing the phrase “is not doing business” with “does not have a physical presence.” [Amended Tex. Admin. Code title 34 section 3.586, Tex. Comptroller (2/5/21)].


  • New law, Assembly Bill 2 (A.B. 2) adopts several federal income tax provisions enacted through December 31, 2020, including those found within the federal Bipartisan Budget Act of 2018, the federal CARES Act, and the federal Consolidated Appropriations Act [A.B. 2 (Act 1), signed by gov. 2/18/2]. Another new law, A.B. 3, makes changes for S corporations electing to pay corporate income or franchise tax at the entity-level [A.B. 3 (Act 2), signed by gov. 2/18/21]. The Wisconsin Department of Revenue has issued guidance in the form of a bulletin explaining these law changes. 

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