Stimulus 3: Creeping toward a deal. The largest emergency stimulus package in US history neared congressional approval last night. It appeared Hill Democrats, Republicans, and the White finally agreed to the massive bill. It would make direct payments of $1,200 to most American adults and $500 to most children; establish a $500 billion lending program for companies, states, and cities; and distribute nearly $400 billion to encourage small employers to keep workers on their payrolls. The bill also would boost funding for unemployment insurance, and provide more funding to the medical system.
Senate’s Stimulus 3 would create new tax planning opportunities for some corporations. The Wall Street Journal reports (paywall) on business tax elements of the bill. Companies would likely be able to defer or reduce their tax bills by hundreds of billions of dollars. Of note: A provision to allow companies to use losses from 2018 through 2020 to offset profits from five prior years. It may make sense to let them carry back losses from 2020, but why 2018 and 2019 when the economy was strong? Reed College tax professor Kim Clausing warns that it makes little sense “to start handing out [benefits] to the least successful companies of our most successful times.”
Federation of Tax Administrators: “Grim, bloody” state revenue picture . The organization predicts the loss of cash flow in the coronavirus economy is becoming a crisis for states. “We now anticipate that large amounts of [tax payments] will not be collected ever. We expect many sole proprietorships and individuals will no longer have the cash to make their tax payments by mid-July, and after that we will be dealing with bankruptcies and the permanent loss of those revenues.”
Reopening by Easter? President Trump says he’d like to relax restrictions on commerce by April 12. However, few if any public health experts, including senior Administration health officials, believe the pandemic will have crested by then. Trump did not say what he’d do when the current two-week restrictions he announced a week ago expire at the end of March.
As for Florida, a state with no income tax… The Orlando Sentinel reports that the state’s budget will take a big hit as sales tax revenue collapse. The Florida Department of Revenue notes that consumption at restaurants, hotels, theme parks, movie theaters, and sporting events makes up 20 percent of state sales tax collections. And many clothing retailers, Florida’s 10th-largest source of sales taxes, have closed for the foreseeable future. Perhaps not surprisingly, Gov. Rick De Santis remains reluctant to impose a statewide order to shelter in place.
The Tax Court will remain closed indefinitely. It announced this week that it will continue to process items received electronically, and eAccess and e-file systems “remain operational and the Court will continue to process items received electronically, serve orders and opinions, enter and serve decisions, work with litigants, and receive telephone calls.” Mail won’t be delivered until the building reopens, but taxpayers can mail petition filings or notices of appeal and comply with statutory deadlines based on United States Postal Service postmarks or delivery certificates of a designated private delivery service.
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