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Sunday, February 7, 2021

Ideas for States for Pandemic Tax and Budget Policies

picture of yard waste with several eatable oranges in it

My latest Moving Forward? article for Tax Notes State is: Suggestions for Pandemic State Tax Policy Endurance (12/17/20). I include a variety of suggestions to help individuals, businesses and state and local governments. I hope you'll take a look - here.

Examples:

  • Federally-declared disasters such as the COVID-19 pandemic allow the IRS to extend due datesfor tax returns and tax payments. Last year, the result was a July 15 due date rather than April 15. Most states followed suit. But a big deal for states is that their fiscal years end June 30. The shift of payments to the next fiscal year likely resulted in greater borrowing and costs for the states. However, many high income taxpayers were quite capable of paying taxes normally due on April 15 and June 15. The better message (and true for any future disaster) is to include a plea that if you can pay at the normal time, please do so to reduce costs to the state.

  • COVID-19 legislation included lots of new complexities. This, coupled with state and local rules for paid sick and medical leave, new tax credits and grants, etc. is often too much for many small businesses to deal with. A result is that some may have not claimed benefits they were eligible for or mandated to provide. State and local governments should have systems in place to provide help getting through all of the rules including some online tools. They should also seek assistance from the federal government on this as the benefits and mandates come from all levels of government. There are many retired finance and accountng experts who can help provide these services.

  • Some struggling businesses with tax obligations might prefer to give up unused assets than have outstanding bills that pile up interest and penalties or use cash that is needed for other purposes. A system to take non-cash payments such as buildings and equipment no longer needed, should be in place.

  • Despite tough times, consider clawbacks and safety requirements when grants and tax breaks are misused. For example, any tax break to help with the pandemic should have had the caveat that the business had procedures in place to reduce the spread of the virus. For example, a 1/18/21 Washington Post article reports that at least 5 anti-vaccine groups received PPP funds.

  • While many struggle in the pandemic, some individuals and businesses were doing fine or perhaps even with increased revenues. There is a need for ways to easily enable those doing well do help get supplies and other assets to those in need.  Platforms where people can match resources and needs can help, with governments providing some of the pick up and distribution outlets to help ensure safety of such a system.  My picture above of the oranges in the yard waste garbage is a good example of waste. There were many people who would have been thankful to have had these oranges someone with too many treated as garbage and likely did not have a good way to get them to someone who needed them.
There are more suggestions and perhaps the article will lead you to identify more relief ideas for now and going forward.

What do you think?

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