Minnesota should match any federal government extensions for the April 15 deadline for filing and paying income taxes, the Minnesota Chamber of Commerce said in a Tuesday letter to Democratic Gov. Tim Walz and legislative leaders. Additionally, the state should consider a 90-day extension for the May 15 deadline for property tax payments and waive interest and penalties, the chamber said.
The chamber also asked for extensions of sales tax remittance deadlines for the months of February and March, which would otherwise be due March 20 and April 20, for industries “hardest hit” by actions taken to contain the spread of the virus.
Since the letter was sent, the state Department of Revenue announced on Wednesday it will offer a one-month sales tax payment extension for the month of February to businesses that the governor ordered temporarily closed through an executive order. Those businesses include restaurants, bars, movie theaters and vaping lounges.
Chamber President Doug Loon told Law360 Thursday the chamber welcomed the move but hoped the governor would expand the relief to the month of March, as well as to other companies that were not ordered to close in the governor's executive order.
“Uncertainty is the greatest challenge facing businesses, and there's a gap of time where businesses are seeing a drop in customers, supply chain disruptions,” Loon said. He said that this uncertainty brought with it cash flow problems and that the chamber's suggestions were aimed at easing these problems, particularly for small businesses.
Loon added that certain businesses that were not ordered to close, like retailers, have also been affected by the virus' spread, noting that mall administrators have shut down malls in an effort to participate in the social distancing that the governor has encouraged. He said such businesses should also receive any form of sales tax relief that is afforded to the businesses directly affected by the governor's executive order.
Treasury Secretary Steven Mnuchin said Tuesday that the federal government will delay the tax payment deadline for most individuals and businesses to July 15. However, the April 15 filing deadline would be left in place.
State Rep. Paul Marquart, D-Dilworth, chairman of the House Taxes Committee, told Law360 that Walz has the authority to extend income tax deadlines even in a nonemergency situation, saying that “that's another option I know is on the chamber list that I think is certainly going to happen.”
Loon told Law360 that because 90% of businesses in Minnesota file taxes as pass-through entities, extending income tax filing and payment deadlines would ease cash flow problems.
Federal lawmakers pushed the IRS on Thursday to delay the April 15 tax return filing deadline along with the payment deadline to help taxpayers cope with the pandemic, saying deferring tax payments for three months didn't go far enough. At the state level, California, Maryland and Indiana have extended their deadlines for residents and businesses to both file and pay their 2019 taxes to July 15. New Jersey would also match federal extensions under a bill passed Thursday by the state Legislature.
The Minnesota chamber also requested in its letter that unemployment insurance claims that are related to the pandemic not be counted against an employer's experience rating, which is a metric that determines the rate an employer is taxed for unemployment insurance. However, Loon told Law360 it was unclear how much flexibility the state has in its unemployment insurance system and said the chamber was speaking with the state Department of Employment and Economic Development on the matter.
Regarding the suggestion for property tax relief, Marquart said that the state could change laws to compel counties, which are the main administrators of property tax, to offer relief. He cautioned that delaying property tax collection for a significant amount of time could also cause cash flow problems at the county level.
Marquart said the Legislature was considering other options for tax relief but that those options were in the beginning stages of discussion.
The governor's office did not respond to requests for comment.
--Editing by Vincent Sherry.
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