During this challenging time, governments the world over are doing their best to support businesses and individuals adversely affected by the new coronavirus (COVID-19). They mean well, but their assorted relief efforts have added to the complexity of the situation.
Some states automatically extended certain sales tax filing and payment deadlines and waived penalties and interest for all businesses. Some are offering payment extensions but not filing extensions. Some have waived penalties but not interest.
Other states are providing relief for businesses in certain industries only, or for those with less than a certain threshold of sales tax liability. Taxpayers in some states must request relief and may have to prove their inability to file or pay as required is directly linked to the COVID-19 pandemic.
In the home-rule states of Alabama, Colorado, and Louisiana, some local governments are waiving late payment penalties for municipal or county sales taxes or offered other local sales tax relief. Unfortunately, state tax departments don’t keep track of this information.
Companies doing business in other countries have even more information to sort through. Many provinces in Canada have extended sales tax filing and payment due dates. As in the U.S., some of that relief is for all businesses, while some is available to smaller businesses only.
And value added tax (VAT) relief is all over the map. VAT rate reductions have been implemented on electronic books and newspapers in the U.K., catering services in Germany, and hospitality services in Moldova. Some payment holidays will be in effect for months or even years.
Meanwhile, most relief in the U.S. is much more immediate. Whether states will extend it if the pandemic continues remains to be seen. For now, the focus is on opening as many businesses as possible, as safely as possible.
All we can do is keep informed and try to prepare for the future. To help with that, Avalara is updating this COVID-19 tax relief roundup regularly.
A Senior Writer at Avalara, Gail Cole is on a mission to uncover unusual tax facts and make complex laws and legislation more digestible for accounting and business professionals — or anyone interested in learning about tax compliance.