Bradley attorney Bruce Ely was quoted in the Birmingham Business Journal on the Alabama Tax Cuts and Jobs Act Task Force bill that has been filed in the Alabama Legislature (HB 170) addressing the taxability of coronavirus-related funds, among other things. The bill would provide an exclusion from Alabama individual income taxation from all those CARES Act and Consolidated Appropriations Act benefits such as stimulus checks and PPP loan forgiveness, benefits not currently excluded from Alabama individual income taxation.
Ely said this bill is expected to be fast-tracked through the legislature to amend that. "Sen. Dan Roberts' and Rep. Danny Garrett's 45-page bill is the most comprehensive I've seen so far in terms of exempting from Alabama tax the various federal stimulus payments to individuals, forgiveness of PPP and other SBA-backed loans, and grants and subsidies from the SBA as well as from the governor's Coronavirus Relief Fund (CRF),” he said. “The bill also conforms to the new federal law that retroactively allows PPP loan borrowers to deduct their business expenses funded by the loan proceeds. That's huge.”
In addition, it changes Alabama’s apportionment factor for most corporate income taxpayers from a three-factor formula with the sales factor double-weighted to a single sales factor formula, which Ely said is good for in-state companies selling goods out of state.
“The bill also puts Alabama in the majority of states that have switched to a single apportionment factor for multistate companies based on their sales,” Ely said. “So an in-state company selling goods or products to out-of-state customers, including the U.S. Government, won't pay Alabama income tax on those sales. That was a keystone of the TCJA Task Force's proposals and was approved by the Ivey Administration, including the Departments of Revenue and Commerce."
The original article, "Proposed Bill in Alabama Legislature Would Exempt COVID-19-Related Funds from Income Taxation," appeared in the Birmingham Business Journal on February 1, 2021.