Tax revenues are plummeting while demands for services and benefits, such as unemployment compensation, soar. Meanwhile, some states are beginning a gradual reopening of their economies. Will tax collections begin to grow again? Few people know the answer, yet some states are willing to gamble on changes to tax rules aimed at helping individuals and businesses. Some examples:
Tax credit: To support small businesses, Michigan HB5741 allows taxpayers who employ 50 or fewer persons to claim an additional tax credit against their state business income tax, and to claim advance payment of the credit by retaining funds that it would otherwise withhold. If a business is eligible to receive credits that exceed its tax liability for the year, the difference will not be refunded.
Deadline extension: Minnesota HF393 extends the deadline for first-half commercial, industrial and utility property tax payments until mid-July. Interest and penalties will not accrue before that time.
Exemptions: SB307 in Ohio would exempt purchases of personal protective equipment from sales tax, from the date of its enactment until Jan. 1, 2021. HB2341, introduced in Pennsylvania, prohibits school districts from levying property taxes for the 2021 calendar year above January 2020 levels. Rates for the fiscal year beginning July 1, 2020 may not exceed those of the fiscal year beginning July 1, 2019. In contrast, Vermont H93 would amend the charter of the city of St. Albans and allow it to levy a 10 percent local option tax on “sales, rooms, and meals and alcoholic beverages.” At present, the city’s sales tax rate is zero percent.
Closing bailout loopholes: New York's S8230 would prohibit corporations that receive bailouts from the federal government and then buy back their own stock from receiving New York state tax credits “within three years of engaging in such buybacks.” If a corporation receiving such assistance violates the law and attempts to obtain a credit, it could be subject to a penalty three times the amount of the credit.
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