Every state in the US is offering some sort of tax relief in response to the coronavirus pandemic, and many hemp and CBD companies may be eligible for such relief.
The Internal Revenue Service (IRS) extended its deadline for filing income tax returns and making payments to 15th July 2020, without penalty or interest. Every state has followed suit by extending its income tax filing deadline, although the length of the extension and to whom the extension apply may vary by state. The majority of states has followed the IRS’s lead in extending the income tax filing deadline to July. However, Mississippi, for example, has extended its filing deadline only to May.
In addition to extending filing deadlines for income taxes, many states are offering payment extensions without penalty and payment plans. Below is an overview of various tax relief and extensions that go beyond an income tax filing deadline extension that might benefit hemp and CBD companies:
Alabama is waiving late payment penalties for sales tax for small retail businesses who averaged $62,500 or less in monthly sales in the previous calendar year. Those penalties will be waived until 1st June 2020.
California offers small business taxpayers (those with less than $5m in annual sales) a 12-month, interest-free payment plan for up to $50,000 of sales and use tax liability. Additionally, companies affected by COVID-19 may receive a 60-day extension on filing their state payroll reports and/or deposit payroll taxes with the Employment Development Department without penalty or interest.
Some Colorado retailers may be entitled to an extension on filing and remitting the state sales tax to 20th May 2020. Additionally, businesses can apply for a payment programme to pay monthly instalments on their income tax bill.
The Colorado Department of Revenue’s website explaining its filing deadline extension is a little confusing regarding a July and an October deadline. A representative from the department told CBD-Intel that payment is required by 15th July 2020, but the actual filing need not be made until 15th October 2020.
Businesses with $150,000 in annual sales tax liability may qualify for a 30-day extension for monthly and quarterly sales taxes due in March and April. Connecticut also announced the Priority One Taxpayer Assistance Program that is available to business affected by the COVID-19 pandemic.
Iowa offers a deferral programme for state sales and/or withholding tax for small businesses. Eligible businesses can receive a 60-day extension to file and remit their tax payment.
In addition to extending its income tax filing deadline, Kentucky also extended the filing deadline for the Business Personal Property tax to 15th July 2020.
The deadline for filing returns and making payments of the sales and use tax has been extended to 20th June 2020 for retailers with an annual sales tax liability of $150,000 or less. However, this extension is not available to marijuana retailers. Additionally, penalties for late filing of the corporate excise tax have been waived for all returns and payments made by 15th July 2020 (though interest will still accrue).
Michigan has extended the payment deadline for state sales, use, and withholding tax to 20th May 2020 for those payments that had been due in March, April, or the first quarter, with penalty or interest.
Companies affected by the COVID-19 pandemic may request relief for sales and use tax late payment penalties and interest through the Department of Taxation and Finance. However, this relief does not apply to those required to file returns on a monthly basis nor to participants in the Promptaxprogramme. Additionally, the filing deadline and “all related tax payments” have been deferred to 15th July 2020 without penalty or interest.
North Carolina has extended its deadline for filing corporate and franchise taxes to 15th July 2020. Additionally, the state will not charge penalties for late payment of other taxes, such as the Withholding Tax and Sales and Use Tax, up until 15th July 2020. However, interest will still accrue.
While the Corporate Activity Tax was due on 30th April 2020, companies who “make a good faith effort to estimate their first quarter payments” may be entitled to a waiver of underpayment penalties. Additionally, the deadline to file corporate excise tax has been extended to 15th July 2020.
In addition to extending the income tax filing deadline for partnerships and corporations to 15th July 2020, Pennsylvania also extended the due date for Annual Corporate Net Income Tax returns and payments. Additionally, businesses that collect sales tax will not have to make Accelerated Sales Tax prepayments until July.
Vermont will not assess penalties against businesses affected by the COVID-19 pandemic who cannot meet their March and April sales and use tax deadlines.
Washington has extended filing deadlines for businesses who are monthly, quarterly, and annual filers. Monthly filers may request an extension through the Department of Revenue. For quarterly filers, the Quarter 1 deadline is extended to 30th June 2020, and for annual filers, the deadline is 15th June 2020.
State tax relief availability and eligibility is constantly changing. For more information and updates on your state’s tax relief, check your state tax authority’s website.
– Anthony Traurig CBD-Intel contributing writer
Photo: Nattanan Kanchanaprat