$ 850 million tax break passes through NC House, but Senate expected to sit in it :: WRAL.com

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– The fate of tax laws affecting hundreds of thousands of people who were unemployed last year and thousands of businesses across North Carolina may not be decided for weeks, despite a May 15 deadline to file state income taxes.

The State House passed tax breaks on Thursday with a near-unanimous vote, despite controversy that has erupted in recent days that cost a key House committee chairwoman her leadership position.

But don’t expect state Senate action on the bill “within a week or two,” said Senate Speaker Pro Tem Phil Berger.

“We haven’t made any firm decisions as to how we’re going to resolve this issue,” Berger, R-Rockingham said. “We always have conversations with members about what people want to do.”

This leaves things in limbo on two key questions: whether people who received unemployment benefits last year will owe state taxes on the first $ 10,200 of that income, and whether companies that have contracted Repayable loans from the Federal Paycheck Protection Program can be deducted from their tax expenditures covered by these loans.

The federal government authorizes this reduction in federal taxes, but the General Assembly must vote for the state to do the same.

The first problem would save taxpayers who received unemployment benefits last year around $ 250 million. The second would save businesses around $ 600 million over the next two years.

The unemployment benefit tax break was added to Bill 334 this week, part of a bill that previously dealt only with PPP loans. The change came after Rep. Julia Howard, R-Davie, the chair of the House finance committee, questioned whether colleagues who could benefit from the PPP tax change because they own businesses that have taken out the loans should push the deduction through the legislature.

An internal disagreement between Howard and other Republican leaders has become public. Howard said she felt compelled to come up with a bill that had lingered in her committee, and House Speaker Tim Moore ultimately forfeited her presidency.

Howard was the only member of the House to vote against the measure on Thursday. As she left the Legislative Building, she said she no longer wanted to discuss the matter.

Moore, R-Cleveland, whose law firm secured a PPP loan, said Thursday he had already filed his taxes for last year and would not change that filing, meaning he will not benefit from tax relief.

This may also be the case for other small businesses. For those whose smaller loans have been canceled – Moore’s law firm got around $ 25,000 – it may not be worth asking for a few hundred dollars in tax relief, the speaker said.

The problem is bipartisan: Republicans and Democrats own or have interests in companies that have taken out P3 loans. State ethics rules say they can still vote on the matter, although a few have recused themselves as it is a widely available tax break that affects businesses statewide. .

It is also common in other states. Supporters said 47 other states have complied with federal policy and approved the tax break.

There is some resistance to change, however, in the Senate, and it is unclear when the issue will be resolved. Moore said lawmakers have been contacted by “hundreds” of accountants and businesses seeking clarity.

Normally, the income tax filing deadline is April 15, but it has been moved this year – for state and federal taxes – to May 17 due to the pandemic.

“I think this needs to be resolved, as soon as possible, one way or another,” Moore said.

Regarding unemployment benefit, the State Job Security Division said it sent 950,000 1099-G notices to people who received unemployment benefits in 2020 and that around 530,000 of them – nearly 60% – chose not to withhold state taxes because they received weekly payments.

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