In a welcomed move by the business community, Gov. Kay Ivey on Friday morning issued a proclamation that would exempt certain CARES Act benefits from Alabama income tax and would extend the sunset (expiration) date of two of our major industrial tax incentives. And following suit within only a few hours, the Alabama Department of Revenue issued a notice titled “ALDOR Updating Instructions and Guidance for Certain Returns” citing the governor’s “Supplemental State of Emergency Proclamation.” The department says that it plans to amend the income tax and financial institution excise tax returns and related instructions to implement the governor’s mandates. The agency pledges to “issue a follow-up notice when this guidance and related return instructions … have been finalized...” and are posted on its website.
The proclamation would exempt not only the CARES Act tax rebates and potential cancellation of indebtedness income resulting from forgiven PPP loans, but more broadly “any tax credits, advance refund amounts, or other direct benefits a taxpayer receives under the federal CARES Act…”
Our preliminary thoughts: Obviously, this is a signal the governor likely will not call a special session this or next month to address the issues raised in her proclamation. We would expect the Alabama Legislature to address the proclamation and any related issues in the next regular legislative session, which begins February 2.
If you have any questions regarding the scope of the proclamation or the ADOR Notice, please contact any of the Alabama members of our SALT Practice Group.