what to know
- California lawmakers on Monday revived a multibillion-dollar tax break for some businesses.
- The Biden administration assured him that the proposal would not jeopardize the state’s own federal coronavirus assistance.
- The federal government has loaned approximately $ 97 billion to California companies during the epidemic, most of which business owners would not have to pay back.
California lawmakers on Monday revived multi-dollar tax breaks for some businesses after the Biden administration assured them not to jeopardize the state’s own federal coronavirus assistance.
The federal government has loaned approximately $ 97 billion to California companies during the epidemic, most of which business owners would not have to pay back. Congress also gave $ 26 billion to the California state government, signed last month by Joe Biden, president of the Coronovirus Relief Package.
Congress already lets business owners cut expenses associated with coronovirus debt from their federal taxes. But California business owners still owe state tax on that money.
California lawmakers wanted to change it, and they were ready to do it earlier this year. But he turned it down because he feared the proposal might force him to lose his own federal coronovirus aid.
This is because Congress has barred states from using coronavirus relief funds for tax cuts. Since the proposal would reduce the amount of money traded in state taxes, Gov. Gavin Newsom’s administration worried that it would count as a tax deduction.
The US Treasury Department assured the state to pass the bill without forfeiting billions of dollars in federal aid. On Monday, the state Senate voted 37–0 to do so. It now goes to the state assembly.
These businesses are particularly difficult as many are in retail such as restaurants and barber shops. Tony Shin reports for NBC 4 News on Monday, February 22, 2021.
The proposal is a relief for tax preparers, who are advising customers to delay filing their state taxes while awaiting the fate of the bill in the Legislature. Now that the bill is running again, it will set off an influx of activity as accounts rush to determine its implications, which will hinge on how regulators interpret it.
“This was our major issue for the last three to four months, as a lack of clarity as to who could qualify for amnesty,” John P. Said Shultes, a member of the city of Ontario east of Los Angeles and California. Society of Certified Public Accountants. “It’s going to be a scramble to get everything ready.”
But not every business will benefit. The tax break only applies to companies that are not publicly traded and who have reported losses of at least 25% of gross receipts during at least one quarter in 2020.
State Sen. Nancy Skinner is a Democrat from Berkeley and chairman of the Senate Budget and Fiscal Review Committee.
If it becomes law, the bill would, according to state Sen. Andreas Borges, cost the state between $ 6 billion and $ 6 billion. He said that he could write another bill later this year to help businesses that have missed out on this proposal.
“Taxing federal emergency relief funds is fundamentally unfair to California,” he said. “This is a big win for businesses in California.”
John Kabatek, director of the California Chapter of the National Federation of Independent Businesses, urged the Assembly to pass the bill as soon as possible.
“Long-standing conversations in committees are not going to help people get back to work and humming Main Street once again,” he said.
Assembly Speaker Anthony Rendon, a Democrat of Luckwood, called the proposal “one of the largest proposed tax cuts in California history.” He said the Legislative Assembly often has different procedures for passing the bill than the Senate, and did not indicate when the Chamber could take it.
“A large number of legislators on this bill indicated its widespread support in the Legislature,” he said.