Law360 (May 22, 2020, 6:55 PM EDT) -- From creating online professional and legal education for clients who can no longer attend conferences to developing new methods of communication with state tax agencies, the global pandemic has changed state tax practice in significant ways.
Illinois' filing deadline for sales and use tax is statutory, meaning the state has to find a workaround to push the date back due to the coronavirus pandemic. (AP)
In are creating virtual substitutes for meetings and conferences, asking tax agencies to communicate electronically, figuring out when revenue departments need statutory authority and analyzing a crush of new litigation and guidance related to COVID-19, the respiratory disease caused by the novel coronavirus.
Here, Law360 presents four ways state tax professionals say the pandemic has changed their practice.
While some aspects of practitioner relationships with departments of revenue haven't changed much, especially in business conducted over the phone and by email, the pandemic has given rise to a host of new issues to navigate.
Among the issues that can be cause for concern are knowing which states will accept electronic signatures and realizing that previous ways of sending documents may not be as reliable now, said Craig Fields, state and local tax group chairman at Blank Rome LLP.
"Some states allow electronic signatures for many things, and some allow them for very few things," Fields said.
In the past, when original signatures were required, firms may have used overnight couriers, he said, but on-time deliveries are not guaranteed during the pandemic.
"In the old days, overnight generally meant overnight," Fields said. "In the past two months, that's not necessarily so."
Practitioners interviewed by Law360 for this article all said that tax agencies have made an effort to be flexible with deadlines and requirements, but sometimes they find that their hands are tied.
For example, in Illinois, the filing deadline for sales and use tax is statutory, noted Breen Schiller, the state and local tax group chairwoman at Horwood Marcus & Berk. She said clients have called her saying that the deadline has been pushed back in other states and asking if Illinois could do that, too.
"They can't. So they've tried to find a workaround," Schiller said. "That's all they can do; then you have to take what you can get."
Pandemic Information Glut
Ever since the Internal Revenue Service moved to extend the deadline for filing and payment of federal taxes to July 15, states began issuing a flood of guidance as they decided, in almost all cases, to conform their own filing and payment dates with the federal government. Then came the guidance on tax issues with the Coronavirus Aid Relief and Economic Security Act, or CARES Act , along with guidance on tax issues with the Paycheck Protection Program. Finally, there has been guidance on more purely technical matters, such as whether states will seek to assert nexus on employers if employees are working remotely solely to comply with stay-at-home orders amid the pandemic.
Keeping up with it all has canceled out any slowdown there might have been in day-to-day state tax work, said Jay Jetter of Snell & Wilmer.
"That was kind of a mad scramble to get our hands on the [CARES Act] bill, and then be able to interpret it as soon as we could, and then to get a bunch of legal alerts out," Jetter said.
He said he has been busy answering questions about whether the income from the PPP loan program is taxable and whether temporary telecommuting could give rise to nexus for income tax purposes.
The revenue departments seem to be in the same situation, said Zach Gladney of Alston & Bird LLP. Sometimes, he said, they are the ones to ask for extensions on other matters because there is so much guidance to put out on the pandemic.
"My impression is that the department of revenue officials are very busy, because they're now resuming the ongoing work that they had, in addition with promulgating relief provisions," Gladney said.
Virtual Client Meetings
Once Horwood Marcus' Schiller and her teammates found ways, in the pandemic's early days, to connect among themselves, they turned to thinking about new ways to do so with clients that went beyond the use of moving to video calls, Schiller said.
The group realized that the cancellation of in-person meetings and conferences meant that a key avenue for clients' receiving necessary continuing professional and legal education was closed off. So Schiller and her teammates decided to do it themselves, creating regular webinars for those efforts.
"We spent a lot of time putting something together in the beginning, and we've been doing it weekly," Schiller said. "That's a huge need, and it's another stressor on top of their other stress, so we're trying to fulfill that need in some way."
Tax professionals are also working to take material that was to be provided live at conferences and move it online. For example, Jennifer Weidler Karpchuk, state and local tax group co-chairwoman at Chamberlain Hrdlicka, said she is working with fellow panelists on a presentation that was supposed to be given at the May meeting of the American Bar Association Section of Taxation.
The material, including slides, will be the same, but the preparation will be somewhat different, Weidler Karpchuk said.
"We're going to be planning a call to sort of plan when we'll be jumping in on each other," when talking, she said. "It's a little different in this format — you don't want to be talking over each other."
New Schedules and Environments
Practitioners with school-age children are working full time while also, in coordination with their spouses, home-schooling those children. Some are taking care of babies and toddlers. All are juggling work and home life with new realities.
Fields of Blank Rome, who lives in New York City, said that for too many weeks, his work at home was punctuated by sirens screaming nearby at all hours, a constant reminder of the suffering caused by the pandemic as it ravaged his town. He said he is thankful that those sounds have now eased.
Gladney of Alston & Bird said he rises at 5 a.m. so that he can work for a few hours before assisting with home-schooling his two daughters. He relies on a daily bike ride to clear his head. He and his wife worry about how they will manage if school doesn't reopen in the fall, but he tries to focus on the positive.
"I certainly see my family more than I have," Gladney said. "I take a break and eat dinner with my family every night, which is something I have never been able to do in my professional practice during the week. So that has been one of the nicest upsides that I have seen."
--Editing by John Oudens and Neil Cohen.
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