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Daily Tax Report: State

New York Shifting Sales Tax Receipts to Help Hospitals (4)

April 6, 2020, 4:19 PMUpdated: April 7, 2020, 12:34 AM

New York is diverting sales tax proceeds to help struggling hospitals, and Massachusetts tax revenue actually came in ahead of expectations in March. In California, meanwhile, business groups aren’t entirely pleased, but counties agreed to waive interest and fees on late property taxes. Here’s the latest on shifting state tax guidelines, deadlines, and policy to deal with the coronavirus pandemic. For Friday’s coverage click here. Here’s a state-by-state roadmap.

New York State will withhold a total of $250 million annually in sales tax revenue from local governments for two years, instead placing the money in a fund for financially distressed hospitals and nursing homes.

The measure is part of a larger plan to help fill the state’s budget gap by reining in Medicaid spending.

The state’s $177 billion budget for fiscal 2020-21 included legislation requiring the state comptroller to annually withhold $200 million in sales tax revenue from New York City, and $50 million annually from counties outside of the city. The funds will instead be redirected to the newly created “New York State Agency Trust Fund, Distressed Provider Assistance Account,” according to the legislation.

The comptroller’s office is charged with determining each of the 62 county’s share of the $50 million.

The Citizens Budget Commission, a nonprofit fiscal watchdog group, in its analysis called the provision “poorly conceived.”

New York Gov. Andrew Cuomo (D) had originally proposed shifting a portion of Medicaid spending onto the localities that administer the program, so they too had “skin in the game.”

After pushback, Cuomo and leaders compromised, shifting only a portion of tax revenue to aid hospitals and nursing homes.

“Nobody thought that was a good idea,” said state Sen. Gustavo Rivera (D), who chairs the Senate Health Committee. “I’m glad we were able to fight him on it and that we kind of won.”

Oklahoma Budget Fix

Oklahoma lawmakers Monday signed off on tapping the state’s savings account to plug an anticipated budget hole.

During a special legislative session, legislators Monday passed a trio of budget stabilization bills (SB 1053, SB 199, SB 617), to withdraw a total of $503.9 million from available state reserves to address a revenue shortfall brought about by economic slowdowns caused by Covid-19 and low oil prices, according to a statement issued by the Oklahoma House of Representatives.

State lawmakers hailed passage of the measures as a way to head off automatic budget cuts that would have been triggered by an expected $416 million revenue failure for the remainder of the 2020 fiscal year, which ends June 30.

However, Gov. Kevin Stitt (R) indicated that more work is needed to address the revenue shortfall after canceling a scheduled Monday meeting of the Board of Equalization, the body charged with officially declaring a revenue failure.

“We have to resolve some additional items before the Board of Equalization can certify the full revenue failure of $416 million,” said Stitt in a Monday release. “I look forward to working with the House and Senate over the next week to negotiate the budget for the remainder of this fiscal year and for FY21.”

Massachusetts Revenue Outperforms


Massachusetts reported March tax revenue that was better than expected, but uncertainty about the outlook could delay the development of a budget, Gov. Charlie Baker (R) said Monday in a news briefing about the pandemic.

“March actually came in over benchmark and we’re all kind of scratching our heads about what the last three months of the year are going to look like and what the beginning of the next year is going to look like,” Baker said.

March receipts were $2.7 billion, 3.2% over the benchmark level, the Department of Revenue commissioner, Geoffrey Snyder, said April 3 in a news release. He noted that the month is not typically a top month for revenue collections and that future disruptions were possible.

The deferral of regular sales, meals, and room taxes, as well as extended personal income tax filing and payment deadlines could affect revenue. “We will monitor the economic conditions and the impact of Covid-19 and tax deferrals on tax collections very closely for the rest of the fiscal year 2020 and into the next fiscal year,” Snyder said.

Preliminary revenue collections for March were $2.66 billion, which is $83 million or 3.2% more than anticipated. Year-to-date fiscal year collections through March were up 4.3% to nearly $21.1 billion, the state said.

California Counties Cede on Property Taxes

A unified statement from California’s county officials that they will waive interest and fees on late property tax payments due April 10 won praise from Gov. Gavin Newsom (D), but business groups say the deadline should be formally extended to July 15.

The California State Association of Counties and the California Association of Treasurers and Tax Collectors’ statement of April 4 appeared to provide coherence after conflicting statements by officials in some of the state’s 58 counties. Some tax collectors had said they would grant relief for payments that are late due to the pandemic, while others said they wouldn’t.

“This is good news for Californians,” Newsom said in a news release April 4.

Still, county officials say relief will be granted on a case-by-case basis, meaning property owners must apply for it and demonstrate the impact of the crisis on their ability to pay. County officials don’t have the authority to move the deadline and have asked Newsom to keep it in place.

Many county tax collectors have closed their offices, making it difficult or impossible for property owners to reach them for advice on how to qualify for relief, David Kline, spokesman for the California Taxpayers Association, told Bloomberg Tax on Monday. The group, together with dozens of other business groups, including the California Chamber of Commerce, urged Newsom to push the deadline to July 15.

“We still believe a statewide, concrete standard is necessary to provide certainty,” Kline said.

In the joint statement, the county officials said: “Property owners who can pay or that haven’t been directly affected by Covid‐19, including international corporations and out‐of‐state landlords, still need to pay on time to keep critical government services running.”

Business groups are concerned the statement means counties could discriminate against international or out-of-state owners when evaluating requests for relief, possibly violating constitutional protections against discriminatory treatment, Kline said.

Representatives of the tax collectors association didn’t respond immediately to requests for comment.

“I don’t think counties will use any different measures for any property tax owners,” Geoffrey Neill, legislative representative for the counties association, told Bloomberg Tax.

County tax collectors, most of whom are elected, have held firm on the April 10 deadline to protect local coffers. A delay would take tens of billions of dollars from local government, create cash flow programs, and cause some local governments to default on loans, they have said.

State law requires owners to pay annual property tax in two installments, due Dec. 10 and April 10. A 10% penalty and other fees apply to late payments.

More on Rhode Island Deadlines

The Rhode Island Division of Taxation on Monday updated its advisory about the new dates for certain tax filings and payments.

The Ocean State provides three additional months to file returns and pay balances due. No penalties and no interest will apply to those who file on or before July 15.

Tables in the advisory have been updated to include language about fiscal-year filers and to show that the new deadline also applies for composite income tax, and to provide information about pass-through withholding.

Tennessee Gives Professional Filers More Time

The Tennessee Department of Revenue on Monday extended the due date for filing and paying its professional privilege tax—which is charged to attorneys, physicians and other registered professionals—to July 1 from June 1. Gov. Bill Lee (R) included the tax extension in Executive Order No. 24.

Interest and late filing penalties will not be applied to returns filed and payments made on or before the extended due date. More information can be found here.

The professional privilege tax is a $400 annual tax for individuals licensed or registered to practice certain professions in Tennessee. Beginning this year, only the following professions are subject to the tax: agents; registered broker-dealers and investment advisers; attorneys; lobbyists; and physicians and osteopathic physicians. All other professions previously subject to the tax are now exempt.

The department had previously announced state tax deadline extensions for income, franchise and excise taxes.

Tax Relief for Florida’s Small Businesses

Small businesses in Florida applying for loans under the Coronavirus Aid, Relief and Economic Security Act won’t be required to pay taxes on those funds, the governor said Monday.

“I find that requiring payment of documentary stamp taxes on these loans under Florida law will discourage small businesses in Florida from applying for such loans,” Gov. Ron DeSantis (R) wrote in an executive order.

The suspension will continue as long as the state of emergency declared in Florida on March 9 remains in effect.

The CARES Act (Public Law 116-136) created a paycheck protection program, providing loans to small businesses affected by the effort to stop the spread of Covid-19.

“In short, the Governor’s order allows employers receiving money from the federal CARES Act to use the full dollar amount to pay their rent and help their employees,” Helen Aguirre Ferré, the governor’s spokeswoman, said in a statement.

—With assistance from Keshia Clukey in Albany, N.Y., Tripp Baltz in Denver, Joyce Cutler in San Francisco, and Emily C. Dooley in Sacramento.

(Updates with a section on the Oklahoma budget. Earlier updates added information on Massachusetts, New York, Rhode Island, California, and Florida.)

To contact the reporters on this story: Laura Mahoney in Sacramento, Calif. at lmahoney@bloomberglaw.com; Paul Stinson in Austin, Texas at pstinson@bloomberglaw.com; Chris Marr in Atlanta at cmarr@bloomberglaw.com; Jennifer Kay in Miami at jkay@bloomberglaw.com

To contact the editors responsible for this story: Jeff Harrington at jharrington@bloombergtax.com; David Jolly at djolly@bloombergtax.com

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