New Jersey Sets One-Month Grace Period for Property Taxes (2)

April 28, 2020, 12:40 PM; Updated: April 28, 2020, 9:37 PM

New Jersey towns offered property taxpayers a one-month grace period on Tuesday, while Oregon said businesses will get a reprieve on payments of the commercial activity tax. Here’s the latest on shifting state tax guidelines, deadlines, and policy to deal with the coronavirus pandemic. For Monday’s coverage click here. Here’s a state-by-state roadmap.

Municipalities in New Jersey can allow a one-month grace period for property tax payments due May 1, under an executive order signed Tuesday by Gov. Phil Murphy (D).

State law limits towns to 10-day grace periods for waiving interest and penalties for late property tax payments, and those can be extended for natural disasters under an amendment adopted after superstorm Sandy in 2012. But the executive order (No. 130) was necessary because the state law has no mechanism for an extension due to a public health emergency, Murphy said.

“Allowing municipalities the option of extending the grace period for May property tax payments is the right thing to do as many New Jerseyans are impacted financially as a result of this crisis,” he said in a statement. “Leaders of towns and cities across the state have been trying to find ways to lessen the blow on local residents, and with this action, they are empowered to provide relief to homeowners as we continue to do everything possible to fight this pandemic.”

Oregon Cuts Businesses Some Slack on CAT

Oregon companies seeking relief from the state’s new gross receipts tax will get a bit of help courtesy of Gov. Kate Brown (D) in recognition that many businesses are beleaguered by the pandemic.

The commercial activity tax—known colloquially as the CAT tax—is imposed at a rate of 0.57% on total revenue in excess of $1 million a company makes from transactions and activity in Oregon after a 35% subtraction for certain business expenses. Passed in 2019 to fund schools, the first estimated quarterly payments are due April 30.

Many Oregon businesses, citing the pandemic, have been urging Brown to delay implementation of the CAT or otherwise alter it in some fashion.

Brown has ordered the Department of Revenue to allow businesses that owe less than $10,000 in annual tax liability to forgo making estimated quarterly payments in 2020, her office told Bloomberg Tax in an email Tuesday. The quarterly payment threshold had been $5,000.

The department will not assess penalties for failing to make estimated quarterly payments for Covid-impacted companies that can show they lack the financial capability to do so.

“This flexibility does not change businesses’ obligations to pay their annual tax liability and is consistent with Governor Brown’s priority of preserving revenue for essential state services for Oregonians during this crisis,” the email said.

N.Y. Lawmaker Proposes Property Tax Extension

People who owe quarterly property tax payments to counties, towns, villages, and school districts due April 15 in New York would be able to delay them until Dec. 31 without late fees, under a bill proposed Tuesday.

The bill (S.8194), introduced by State Sen. David Carlucci (D), faces uncertain prospects as it isn’t clear whether lawmakers will be able to meet—either virtually or in Albany with social-distancing rules in effect—before their session ends in early June. But Carlucci said the need for relief is urgent.

“Unemployment and underemployment rates are skyrocketing, and many New Yorkers and small businesses are struggling to pay their bills,” he said in a statement. “We do not want residents having to choose between property taxes and medical care, prescription drugs, or food.”

The statewide proposal followed action Monday by Westchester County Executive George Latimer (D) to approve a property tax extension to July 15, from April 30. The Board of Legislators bill (LL-2020-7) authorizes towns, but not cities, in the populous suburban county to reduce late-payment penalties by up to 80%. Westchester’s cities must act on their own to adopt similar measures.

Louisiana Ending Fiscal Year on Sound Footing

Gov. John Bel Edwards (D) said Tuesday that Louisiana was in good shape financially for the fiscal year that ends June 30, but that the state’s Revenue Estimating Conference will meet in mid-May, and its findings could prompt changes for the next year.

“The good news for us as we finish up the current fiscal year, we were running a significant excess in the current year,” Edwards said at a briefing in Baton Rouge. “The excess that we had, along with surplus from the previous year, really has put Louisiana in a much better position than other states.”

The $1.8 billion in federal aid allocated to Louisiana cannot be used to offset lost tax revenue, but Edwards said the state is looking for more flexibility from Congress as to how the federal funding can be spent. Local governments were to receive 45% of that funding, with the balance going to the state.

Minnesota Relief on Mining Taxes

The Minnesota Department of Revenue will offer a 60-day payment grace period to mining companies with duties under the occupation tax for annual payments due May 1.

In response to the Covid-19 pandemic, the department said on April 24 it will not assess penalties or interest during the grace period if taxpayers remit full payments by July 1. The penalty waiver also applies for extension filers that remit 90% of the amount due. The department further specified taxpayers can request relief from penalty and interest for late payments for reasonable cause.

“This grace period only applies to payments,” the department noted. “You should still file your annual occupation tax return by May 1, unless you plan to file under the extension guidelines. Returns filed on extension are still due December 1, 2020.”

Wisconsin Allowing Appeals Online

The Wisconsin Department of Revenue has issued proposed guidance addressing issues for all major tax programs including individual and corporate income, trust income, sales and use, and excise taxes.

It specifies that taxpayers who paid interest and penalties may file appeals through the department’s My Tax Account website.

In addition, it says taxpayers can’t request an extension for already filed returns, but can demand a waiver of interest and penalties. Taxpayers breaching Wisconsin’s extended filing and payment deadlines will accrue 18% interest per year on the unpaid balance.

The department said it would accept applications for waivers and extensions online through June 10. The department established a May 18 deadline for comments on the proposed guidance.

Texas Automatically Extending Franchise Tax Deadline

The Texas Comptroller’s Office is telling businesses they won’t have to ask to push back the date for filing and paying this year’s franchise tax reports as part of its ongoing effort to ease the challenges posed by the pandemic.

“To aid Texas franchise taxpayers, we are automatically extending the due date to file and pay 2020 Texas franchise tax reports to July 15,” the comptroller’s office said in a Monday update on the agency’s Covid-19 emergency response website.

“We’re grateful that virtually all of our taxpayers are doing their best to remain in compliance with Texas tax requirements, and we want to ease this burden whenever possible,” it said.

Those facing motor vehicle taxes due on purchases will be provided an extension of up to 90 days past the original due date, the office said Monday.

—With assistance from Jennifer Kay in Miami.

(Adds Oregon commercial activity tax reprieve from paragraph 5 and Louisiana fiscal situation from paragraph 15. A previous update added New York property tax proposal, New Jersey and Minnesota grace periods, and Wisconsin online appeals. )

To contact the reporters on this story: John Herzfeld in New York at jherzfeld@bloomberglaw.com; Paul Stinson in Austin, Texas at pstinson@bloomberglaw.com; Michael J. Bologna in Chicago at mbologna@bloomberglaw.com

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

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