TEI Requests Guidance from States Regarding Penalty Relief for State Corporate Tax Returns Filed by November 15, 2018

In October 2018, TEI worked with the Council on State Taxation (COST) and AICPA to request that states issue guidance indicating they will waive late filing (but not late payment) penalties for state corporate tax returns due October 15 and filed late but by November 15, 2018.

TEI's letters to states noted that late filing is preferable given the move of the federal filing deadline to October 15, the fact that the contacted state had not provided at least 30 days between the federal and state deadlines, and complexities the federal Tax Cuts and Jobs Act caused in the 2018 filing season. TEI maintained that waiving penalties for a late-filed returns would enable taxpayers to avoid filing state corporate returns with errors and subsequent amended returns to correct such errors.

A copy of TEI’s letters requesting that relief can be found here

To date, state responses can be broken down as follows:

  • New Jersey and Kansas have granted the automatic late filing penalty waiver for returns filed by November 15, 2018;
  • Other states have indicated that the compressed federal/state filing schedule and TCJA complexities will constitute reasonable cause for granting penalty relief to taxpayers on a case-by-case basis;
  • Other states have referenced their case-by-case penalty relief provisions but have not indicated whether or not the compressed schedule/TCJA changes will constitute a sufficient basis for providing late filing penalty relief; and
  • Other states have expressly stated the compressed schedule/TCJA will not constitute reasonable cause when granting penalty relief on a case-by-case basis.

COST is maintaining a spreadsheet summarizing the responses to date.

The AICPA is also updating their website to include a current status.

If you have any questions regarding these efforts, please do not hesitate to contact TEI Tax Counsel Pilar Mata at pmata@tei.org or (202) 464-8346.

Download the letter.