The Nebraska Department of Revenue released a statement today regarding the treatment of returns impacted by the American Rescue Plan Act (ARPA), specifically around Unemployment Exclusions Adjustments. Read the full statement here.

“The American Rescue Plan Act of 2021 (ARPA) was signed into law by President Biden on March 11, 2021. ARPA includes a retroactive provision making the first $10,200 per taxpayer of 2020 unemployment benefits nontaxable for taxpayers with modified federal adjusted gross income (AGI) of less than $150,000. For married, filing jointly taxpayers, each spouse may exclude up to $10,200.

The Nebraska Department of Revenue (DOR) will automatically adjust the AGI and recalculate the tax on the returns of individuals who electronically filed their returns with Nebraska prior to April 1, 2021 to the extent that DOR can determine that the unemployment compensation was not excluded from income. There are exceptions noted below.

If this adjustment is made to your return, you will receive a letter from DOR notifying you of the correction. Please review the adjustment made and your filed return when you receive this notification and consider if an amended return is needed. Please attach a copy of your notice of adjustment from the IRS or a copy of the federal amended return if you file a Nebraska amended return.

If any of the following apply, DOR will not automatically adjust your return to exclude any unemployment that should be excluded under ARPA. To exclude this income, you must file an Amended Nebraska Individual Income Tax Return, Form 1040XN, to receive the adjustment that you are entitled to:

• Returns filed on paper;
• Returns filed using NebFile;
• Partial-year or nonresident returns;
• A Nebraska amended return was previously filed for tax year 2020;
• If the box on line 29 on your Nebraska return was checked for using federal tax; or
• Your return was filed after March 31, 2021, and did not claim the exclusion for unemployment compensation.

DOR will not automatically adjust credits that may be impacted by the reduction to federal AGI. Taxpayrs who become eligible for any credits or any increase in credit amounts due to this adjustment must file an Amended Nebraska Individual Income Tax Return, Form 1040XN, to claim or change a credit.”

Update: 6/10/21

Maryland is now able to accept returns impacted by Reject Codes Form 502-01730-020 and Form 502-01730-012. Impacted returns can now be resubmitted.

If any Maryland returns received the below reject codes yesterday (4/15) and this morning prior to 7am ET, they can be resubmitted at this time. This relates to MD EIC updates and the latest schema was not released into production until this mornings deployment.

• Form 502-01730-012
• Form 502-01730-020

Issued on May 26th, South Carolina has adopted the Federal suspension of tax on a portion of unemployment compensation for tax year 2020. The latest updates are already live in our applications as of 7:00am ET, June 1st. To review the full policy advisory from South Carolina, please click here. For any SC taxpayer that can now take advantage of this recently adopted legislation, South Carolina will require an amended SC return be prepared and filed.

Software vendors received the below message from CA regarding a delay in acks from returns filed on or around May 5th, 2021. CA acknowledgements should start to come in as CA processes their backlog.

“The issues caused by yesterday’s power outage have been resolved. SWIFT is now up and running and we are able to receive e-filed returns. Again, we apologize for the inconvenience.”

Software vendors received the below message from MA.

“Please be advised that on Monday, May 3, we had a systemic issue which did not allow us to acknowledge some returns (all tax types). This issue is being fixed and the missing acknowledgements are scheduled to be sent out next Tuesday, May 11.“

ALDOR Announces Relief for Taxpayers Affected by Severe Weather in March

AL Department of Revenue released the above statement for Taxpayers impacted by the severe weather in March.

Message from Ohio sent to all software providers.

“We had a population of 200 submissions from April 14, 2021 that were processed but unfortunately acknowledgements were not sent.  Our tech team has corrected the issue and those missing acknowledgements are scheduled to go out tonight.“

What to do if you received unemployment compensation in Utah during 2020

Under the American Rescue Plan enacted on March 11, 2021, unemployment compensation up to $10,200 paid in 2020 is excluded from federal adjusted gross income. This exclusion applies for those with a federal adjusted gross income which is less than $150,000. Utah law generally conforms to the federal treatment of unemployment compensation. If you received unemployment compensation in Utah during 2020 please do the following:

If you have not yet filed your federal and Utah returns: First, ensure you have the most updated forms and instructions and file your returns as normal. The unemployment compensation that is excluded for federal tax purposes will automatically be excluded for Utah tax purposes.

If you have already filed your federal and Utah returns: Do not file an amended Utah return to exclude any unemployment compensation at this time. The Utah State Tax Commission is exploring options to obtain the necessary information directly from the Internal Revenue Service to adjust your return and process a refund automatically. If it becomes necessary for you to take any action related to the exclusion of your unemployment compensation, additional instruction will be provided here after August 1, 2021.