KPMG reports: Colorado, Missouri , Virginia

KPMG This Week in State Tax—produced weekly by the KPMG State and Local Tax practice—focuses on recent state and local tax developments.

• Colorado: The Colorado Department of Revenue revised its guidance on the effect of the CARES Act on corporate and individual taxpayers. Following a related appeals court decision issued last year, the Department determined that certain retroactive CARES Act changes must be incorporated into Colorado law and reflected on prior year income tax returns. Thus, taxpayers must amend these returns to reflect the CARES Act provisions. The Department also determined that certain taxpayers must amend their 2021 Colorado income tax returns to adjust the subtraction that was allowed for the difference between the taxpayer’s reported taxable income and the amount that Colorado taxable income would have been had the CARES Act applied.
• Missouri: The Missouri Supreme Court recently affirmed an administrative hearing commission determination holding that a telecommunications service provider qualified for the sales and use tax manufacturing exemption. In the court’s view, the definition of “manufacturing” in effect for the tax periods at issue captured the taxpayer’s act of transforming an input into an output with a separate and distinct value from the original.
• Virginia: Legislation was signed into law in Virginia providing that for tax years beginning on or after January 1, 2023, the Commonwealth will conform to the Code on a rolling basis, with certain exceptions. Notably, Virginia will not adopt any federal amendments that will increase or decrease general fund revenues by more than certain amounts specified in the law.

Read an April 2023 report prepared by KPMG LLP