NEWS UPDATE
March 19, 2021
State & Federal Tax Filing Deadlines Extended

The IRS announced that it will extend the tax filing date and postpone the payment deadline for federal individual income taxes from April 15, 2021, to May 17, 2021, for the 2020 tax year. Nebraska Tax Commissioner Tony Fulton has announced that the Nebraska Department of Revenue (DOR) will do the same. As indicated in the IRS notice the extension and postponement does not include estimated payments.
Update on Property Tax Incentive Act Credit
Society Remains Hopeful for a Legislative Fix

In August 2020, Governor Pete Ricketts signed LB 1107 into law, creating among other things the refundable property tax credit, based on the amount of a taxpayer's property taxes paid to schools. As a result of the cumbersome nature of this credit, Society members have expressed concern that many Nebraska businesses which report taxable income as pass-through entities may choose to forgo this computation, and thus its owners will also miss out on the intended benefit of this credit.

Last month, members of the Society Board and Legislation and Taxation Committees met with various representatives from the Nebraska Department of Revenue in regard to these concerns. Society leaders (Chairman Ryan Burger, Chairman-Elect Erica Parks, Legislation Committee Chairman Shawn Melotz, Lobbyist Walt Radcliffe, and President Joni Sundquist) held a meeting with Sen. Lou Ann Linehan, chairman of the Revenue Committee at the Nebraska Legislature, in order to request an immediate fix to the issue.

As a result of the meeting, Sen. Linehan introduced Amendment 501 to Legislative Bill 181. A hearing on the amendment was held before the Revenue Committee at the Nebraska Legislature on March 16. Parks and Melotz submitted position letters in advance of the hearing, while Burger and Sundquist testified in person in support of the Amendment.


As we understand it, and as confirmed by Sen. Linehan’s staff, the Amendment - if passed - would do the following:

For school taxes paid by a pass-through entity during 2020:
  • The pass-through entity has the option to distribute the credits to partners/shareholders under the existing laws.
  • Alternatively, a pass-through entity may choose not to distribute the credits on the 2020 tax return and will instead carryover that credit to the 2021 tax year.
  • On the 2021 tax return, the pass-through entity will receive a refund at the entity level for the credit attributable to tax paid during 2020 where the credit was not distributed to partners/shareholders with the 2020 tax return.

For school taxes paid by a pass-through entity during a tax year beginning in 2021 or later:
  • All pass-through entities will claim a refund at the entity level attributable to the school tax paid during the tax year. The credits will not be distributed out to any partners/shareholders on their individual 1040N.
  • For pass-through entities that opted not to distribute credits to their partners/shareholders for tax paid during 2020, the pass-through entity will receive a refund at the entity level with the 2021 tax return for tax paid in both 2020 and 2021. 

We owe a big thank you to Sen. Linehan for her assistance and time, and are hopeful this bill will pass the Legislature. We will keep you posted.
PPP UPDATE

The U.S. House of Representatives passed legislation that would extend the March 31 deadline for PPP applications to May 31. The legislation now goes to the U.S. Senate for consideration.


PPP FAQs (Updated March 12, 2021)
U.S. House Passes Landmark Pro-Union Rights Bill

On March 9, 2021, the U.S. House of Representatives passed the most pro-worker labor legislation since the 1930s. If it passes the Senate, where it faces an uphill battle, the Protecting the Right to Organize Act (PRO Act) would amend the National Labor Relations Act of 1935 (NLRA), the federal law that allows employees the right to unionize, engage in collective bargaining, and strike.

French Bulldog Dressed As Businessman Works At Desk On Computer
MORE UPDATES


NOTE: Regarding the non-taxable portion of unemployment benefits, the Nebraska Department of Revenue has confirmed that Nebraska begins at AGI, and this adjustment appears to be "above the line," so the taxability (or non-taxability) would automatically follow.




NOTE: The Taxpayer Certainty and Disaster Tax Relief Act of 2020 (Relief Act), enacted December 27, 2020, amended and extended the employee retention credit (and the availability of certain advance payments of the tax credits) under section 2301 of the CARES Act for the first and second calendar quarters of 2021. The American Rescue Plan Act of 2021 (ARP Act), enacted March 11, 2021, modified and extended the employee retention credit for the third and fourth quarters of 2021.
NEBRASKA SOCIETY OF CPAs