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Utah Sales Tax Deadlines Must Wait for Legislative Action (2)

April 8, 2020, 5:05 PMUpdated: April 8, 2020, 11:42 PM

The National Association of Counties sees counties nationwide issuing revenue or tax anticipation notes to ride out the massive revenue shortfall due to nationwide tax extensions. Utah won’t alter its sales tax deadlines until the Legislature is able to discuss the crisis. Meanwhile, Illinois detailed plans to give distillers tax deductions on alcohol for making hand sanitizer. Here’s the latest on shifting state tax guidelines, deadlines, and policy to deal with the coronavirus pandemic. For Tuesday’s coverage click here. Here’s a state-by-state roadmap.

Counties will be among the entities that are going to need to issue revenue or tax anticipation notes to meet expenses in the coming months, given the fiscal stress the new coronavirus pandemic is causing. And counties are hoping to get a little help from the Treasury Department when they do that, according to an official with the National Association of Counties.

Matthew Chase, executive director of NACO, said Wednesday during a videoconference that virus-related tax policy decisions by the federal government and the states are going to create cash flow problems for counties.

Pushing back filing and payment deadlines for income and sales taxes will delay the timing of revenues at all levels of government, Chase said.

“Most counties have developed a rhythm for when they collect taxes, timed to when they pay expenses,” he said. “They’re going to wind up with less cash on hand.”

One way to meet the shortfall is by issuing revenue anticipation notes or tax anticipation notes to finance current operations before tax revenues are received. When the taxes come in later, those proceeds can be used to retire debt.

Chase said the Treasury Department can help resolve the situation using its new authority to make loans and municipal bond purchases to aid state and local governments. The CARES Act created a $500 billion Economic Stabilization Fund that authorizes the department to purchase obligations of states, local governments, and political subdivisions of them, to cover losses incurred as a result of Covid-19, NACO said.

Utah to Wait and See on Sales Tax

The Utah State Tax Commission gave notice on Wednesday that it will hold off on making any adjustments to sales tax deadlines until late April, when the state Legislature can address the Covid-19 impact in a special session.

The commission has been approached by a number of merchants who collect the state’s 4.85% sales tax, voicing concerns about their ability to file returns and remit taxes by the April 30 deadline because of the pandemic, Tammy Kikuchi, spokeswoman for the commission, told Bloomberg Tax.

Legislative leaders, with the concurrence of the office of Utah Gov. Gary R. Herbert (R), asked the commission to defer any action—including granting an overall extension of filing deadlines—until the special session is convened, she said.

Nebraska Property-Tax Discussion

It’s too early to say whether the coronavirus crisis has pushed property-tax reform off the table in Nebraska, Gov. Pete Ricketts (R) said Wednesday in his daily coronavirus briefing.

Ricketts was responding to reports that Sen. John Stinner (R), chairman of the Appropriations Committee in the single-chamber Nebraska Legislature, had declared the property tax relief effort dead while speaking earlier that day at a web conference organized by the Platte Institute, a policy group.

“I believe it’s way too premature to be able to say that,” Ricketts said. “Certainly we expect impacts on revenues, but how that is going to play out, we just don’t know at this point.”

The issue has bedeviled Ricketts and lawmakers over the past several legislative sessions. The debate pits the agricultural industry, which has been hard hit by rising property taxes, against urban business groups seeking income tax cuts.

A bill (LB 974) that would have cut property taxes by $520 million over the next three years was debated on the floor of the legislation over a two day period in late February, but has received no attention from the Legislature since the health crisis became the main focus for lawmakers.

Illinois Details Tax Break on Alcohol for Sanitizers

The Illinois Department of Revenue said it sent distillers guidance for claiming tax deductions on purchases of alcohol for production of hand sanitizer.

Manufacturers typically incur a tax liability in Illinois based on the potency of the alcohol used in distillation; the relief removes all tax liability. The tax benefit for distillers is part of a broader package of accommodations Gov. J.B. Pritzker’s (D) emergency declaration made available to certain businesses during the public health crisis.

Illinois “is pleased to help these distillers who have answered a call to service by volunteering to produce hand sanitizer, a product so urgently needed,” David Harris, the department’s revenue director, said in Wednesday’s announcement. “The department will continue to take steps to help taxpayers have the financial flexibility to address needs due to this COVID-19 outbreak.”

Texas Revenue Hit to Be ‘Several Billion’

Texas Comptroller Glenn Hegar is advising state agencies to trim their spending, with tax revenue to be hit by the pandemic and the sharp downturn in oil prices.

“Be forewarned that it is probably going to be a revised downward adjustment of several billion dollars,” he said during an interview about the coronavirus with the Texas Tribune.

Hegar has started talking to his staff about freezing hires and looking for more ways to save money, including postponement of information technology projects. It will be summer before officials have the data they need to revise the state’s revenue estimate, expected in July, he said.

That said, Hegar doesn’t expect there will be a need for lawmakers to return to the Capitol before the Legislature’s January 2021 start date.

“I don’t think that there’s a need for them to come in for a special session,” he said, noting the state’s large rainy day fund balance—currently $8.5 billion—can be used for cash flow purposes.

“We have a lot of different flexibility,” he said. “Leadership can move money around to deal with budgetary constraints that we may have, like the coronavirus right now.”

Louisiana Appeal Hearings Suspended

The Louisiana Tax Commission said Wednesday that since Gov. John Bel Edwards (D) has extended the suspension of all legal deadlines until April 30, all appeal hearings before the commission would remain suspended and continued without date.

The commission also pushed back filing deadlines for personal property renditions and public service company annual reports until at least April 30. The previous deadline was seApril 1.

— With assistance from Jennifer Kay in Miami and Christopher Brown in St. Louis.

(Adds comments from the National Association of Counties. Previous updates added sections on Utah, Nebraska, and Louisiana.)

To contact the reporters on this story: Tripp Baltz in Denver at abaltz@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; Kathy Larsen at klarsen@bloombergtax.com; David Jolly at djolly@bloombergtax.com; Yuri Nagano at ynagano@bloombergtax.com

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