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4/30/2020 DISCUSSION WITH DISCUSSION WITH CT DRS:HO CT DRS:HOW IS CT IS CT DRS AND IRS DRS AND IRS RESPONDING TO RESPONDING TO COVID COVID-19? 19? Apri April 30, 2020 30, 2020 Presented by: Eric L. Green, Esq., Green & Sklarz LLC (203) 285-8545 egreen@gs-lawfirm.com Noelle Geiger, Esq., Green & Sklarz LLC (203) 836-9312 ngeiger@gs-lawfirm.com Erica C. McKenzie, Esq., Connecticut Department of Revenue Services (Litigation & Collections Enforcement Unit) 1 Disclaimer This presentation was prepared by Green & Sklarz LLC and does not represent written guidance issued by the Connecticut Department of Revenue Services. 2 2 1

4/30/2020 Today is April 30, 2020 approximately 6 weeks into the COVID- 19 quarantine, pause, shelter in place, and social distancing mandates….what’s going on in TAX? • Review of Connecticut payment and filing extensions • Impact of Covid-19 on Connecticut tax collections and and enforcement • Impact of Covid-19 on Connecticut audits • Identification of issues regarding the impact of COVID-19 on nexus, domicile, statutory residency and income allocation • IRS update on COVID-19 relief 3 3 CT DRS COVID-10 RESPONSE UPDATE: On Tuesday, April 14, 2020, DRS extended filing and payment deadlines for certain state tax returns, to align with federal changes. The impacted Connecticut returns and the associated filing dates and payment deadlines are set forth in the table below. Corresponding questions and answers in the FAQ are in the process of being updated. https://portal.ct.gov/DRS/COVID19/DRS-COVID-19- Response-FAQ#GenInfo 4 4 2

4/30/2020 2019 Tax Return Deadlines extended to July 15, 2020 to align with federal changes Individual Income Tax Return & Payment Form CT-1040, CT-1040-NR/PY Form CT-1040 ES (for 1 st and 2 nd quarter payments) Individual Income Tax Estimates Form CT-1041 (for returns due between April 1, 2020, and July Trust & Estate Tax Return & Payment 15, 2020) Form CT-1041 ES (for any estimated payments due between Trust & Estate Tax Return Estimates April 1, 2020,and July 15, 2020) Form CT-1065/1120SI (for returns due between March 15, Pass-through Entity Return & Payment 2020,and July 15, 2020) Form CT-1065/1120SI ES (for any estimated payments due Pass-through Entity Tax Estimated Payments between March 15, 2020,and July 15, 2020) Form CT-1120, CT-1120CU (for returns due between March 15, Corporation Tax Return & Payment 2020,and July 15, 2020) Form CT-1120 ES (for any estimated payments due between Corporation Tax Estimated Payments March 15, 2020,and July 15, 2020) Form CT-706/709 (for returns due between April 1, 2020,and Estate Tax Return & Payment July 15, 2020) Form CT-706/709 (for returns due between April 1, 2020,and Gift Tax Return & Payment July 15, 2020) Unrelated Business Income Tax Return & Form CT-990T (for returns due between March 15, 2020,and Payment July 15, 2020) Unrelated Business Income Tax Estimated Form CT-990T ES (for returns due between March 15, Payments 2020,and July 15, 2020) 5 5 Sales Tax & Room Occupancy Tax extended filing and payment deadline criteria • $150,000 or less in annual Sales Tax liability qualify for an automatic extension of time to file and pay. (No Extension for annual Sales Tax liability greater than $150,000). • $150,000 or less in annual Room Occupancy Tax liability qualify for an automatic extension of time to file and pay. (No Extension for annual Room Occupancy Tax liability greater than $150,000). • $150,000 threshold must be evaluated separately. • Period to evaluate $150,000 threshold: January 1, 2019, through December 31, 2019 • Monthly returns and payments originally due March 31, 2020, and April 30, 2020, are extended to May 31, 2020. • Quarterly returns and payments originally due April 30, 2020, are extended to May, 31, 2020. 6 6 3

4/30/2020 AICPA State Tax Filing Guidance for Corona Virus Pandemic • AICPA has compiled the latest developments on state and federal COVID guidance! https://www.aicpa.org/content/dam/aicpa/advocac y/tax/downloadabledocuments/coronavirus-state- filing-relief.pdf 7 7 CT DRS operations in general • DRS operations continue, uninterrupted • DRS employees are actively processing returns, payments, and claims for refund with no delay in processing time • DRS employees are available during normal business hours to answer emails and phone calls • File and pay electronically for expedited processing • Only closure: DRS walk-in services 8 8 4

4/30/2020 CT DRS Priority One Taxpayer Assistance Program – April 17, 2020 • Dedicated hotline and email to address collection issues for businesses and individuals affected by COVID-19 who have bank warrants, wage executions, liens, payment plans or current DRS collection actions! • DRS Priority One Hotline: 860-541-7650 • (Monday to Friday, 8:30 a.m. – 4:30 p.m.; to speak to a DRS representative, or to leave a voicemail) • DRS Priority One Email: DRSPriorityOne_CollectionsAssist@po.state.ct.us 9 9 Collections Operations Update • All collections procedures are continuing without interruption. • Apply for an offer in compromise or payment plan using the normal processes. • Permit renewal process has not been affected by COVID-19. • Revenue Agents are available to discuss your collections questions. • Questions about an existing payment plan or offer in compromise? Call the Priority One Hotline. 10 10 5

4/30/2020 CT DRS Audit & Appellate Division Update • Revenue Examiners are working audit cases and are available to discuss any questions you might have. • Appellate Division is still addressing protests. • Electronic communication expedites review of your issue; paper correspondence takes longer to address. • Practice tip – review facts and circumstances for each client and assess settlement opportunities! 11 11 CT DRS Assessment deadline to protest not extended • Notice of Assessment standard Explanation: • This is a notice of assessment. To protest, submit a written request for a hearing to the Commissioner stating your specific objections. Your right to protest this assessment expires [ON A CERTAIN DATE!] after which the assessment becomes final. Protest instructions and Form APL-002 can be downloaded at www.ct.gov/Appeal. • CT DRS has NOT extended deadlines to file protests on Billing Notices. . . Yet. 12 12 6

4/30/2020 CT DRS Criminal Cases and Voluntary Disclosures • Are current criminal cases being worked right now? • Are criminal referrals being made for new criminal cases? • Are CT voluntary disclosure program applications and cases still being worked? 13 13 COVID mandated Telecommuting and nexus? • State and local governments issued shelter in place orders for nonessential businesses • Working remotely is required • Workers live in a state but their company does not have nexus in that state • Will working remotely during COVID create nexus for state withholding tax, income and sales tax liability? • Look out for guidance from DRS regarding these issues 14 14 7

4/30/2020 NJ, MS, PA, DC issue guidance on COVID-19 telecommuting and nexus . . . “As a result of COVID-19 causing people to work from home as a matter of public health, safety, and welfare, the Division will temporarily waive the impact of the legal threshold within N.J.S.A. 54:10A-2 and N.J.A.C. 18:7-1.9(a) which treats the presence of employees working from their New Jersey homes in New Jersey as sufficient nexus for out-of-state corporations. In the event that employees are working from home solely as a result of closures due to the coronavirus outbreak and/or the employer’s social distancing policy, no threshold will be considered to have been met.” During the period of national emergency, Mississippi will not change withholding requirements for businesses based on the employee’s temporary telework location. Mississippi residents are taxable on their total income, regardless of where they work. However, we will not impose any new Mississippi withholding requirements on the employer. Mississippi will not use any changes in the employees temporary work locations due to the pandemic to impose nexus or alter apportionment of income for any business while temporary telework requirements are in place. “At this point, we are not taking into consideration for purposes of nexus those individuals that are Pennsylvania required to telework due to COVID,” Thomas J. Gohsler (Chief Counsel) The Office of Tax and Revenue will not seek to impose corporation franchise tax or unincorporated business franchise tax nexus solely on the basis of employees or property used to allow employees Washington DC to work from home (e.g., computers, computer equipment, or similar property) temporarily located in the District during the period of the declared public emergency and public health emergency, including any further extensions by the Mayor. 15 15 Connecticut Convenience of Employer Rule • Under current law, CT applies a Convenience of Employer Test in determining CT source income of residents of states that apply the same rule (i.e. DE, NE, NJ, NY, PA). • For example, wages earned by a NY resident are allocated to the employer in CT unless the NY resident works outside of CT due to the necessity of the employer rather than the convenience of the employee. • In general, the nonresident’s state of domicile will allow a credit for income taxes paid to CT for income allocated to CT. 16 16 8