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Cities Providing Local Tax Relief Efforts for Small Businesses Impacted by COVID-19

From coast to coast, both state and local tax authorities are rapidly responding to the Coronavirus (COVID-19). And while many of the relief efforts are appropriately aimed at supporting individuals who have been impacted by COVID-19, recent pronouncements from local leaders demonstrate that cities are also eager to implement measures supporting small businesses within their communities.

San Francisco – Tax and Fee Deferrals for Small Businesses

At the local level in San Francisco, Mayor London Breed was quick to announce relief efforts intended to help small business owners who are experiencing a slowdown in business as a result of COVID-19. In addition to providing a moratorium on commercial evictions for small and medium-sized businesses located in San Francisco, the City has implemented the following business tax and fee deferral measures:

  • Deferred Business Taxes for Small Businesses: “Quarterly estimated tax payments of the Gross Receipts Tax, Payroll Expense Tax, Commercial Rents Tax, and Homelessness Gross Receipts Tax that would otherwise be due on April 30, 2020, are waived for taxpayers or combined groups that had combined San Francisco gross receipts in calendar year 2019 of $10,000,000 or less. These quarterly estimated tax liabilities must instead be paid along with annual tax payments for tax year 2020, which will generally be due by March 1, 2021.”

Although these tax bills are generally mailed in late March, The San Francisco Office of the Treasurer & Tax Collector has indicated that businesses with 2019 gross receipts of $10 million or less will receive a letter in lieu of a bill.

  • Deferred Business Licensing Fee“The City is deferring collection of annual small business license and permit fees that make up the Unified License Bill for three months to June 30, 2020.”

Because the license bills have already been mailed, the Office of the Treasurer & Tax Collector will be following up with an email and a letter confirming the due date change by the end of March. The bills will not be reissued.

New York City – Comptroller Stringer Advocates for Commercial Rent Tax and Sales Tax Relief

Across the country, the New York City Department of Finance (DOF) has also acted to provide taxing relief to local businesses impacted by the COVID-19 outbreak. On March 19, 2020, DOF issued a Finance Memorandum allowing for a waiver of penalties for DOF-administered business and excise taxes due between March 16, 2020, and April 25, 2020.

Pursuant to the memorandum “[i]f you file an extension or return or make a tax payment in accordance with these rules, you will not be subject to any late filing, late payment, or underpayment penalties. For purposes of the above filings, while late filing and late payment penalties are waived, interest, where applicable, at the appropriate underpayment rate, must be paid on all tax payments received after the original due date calculated from the original due date to the date of payment.”

Taxpayers may request to have the penalties waived on a late-filed extension or return, or in a separate request. All paper filings under the DOF’s announcement should be marked “COVID-19” on the top center of the first page. The same relief is also available to adversely affected electronic filers.

Also on March 19, New York City Comptroller Scott M. Stringer penned an open letter to New York City’s small business community that demonstrated his belief that the City and State must immediately implement certain taxing measures to provide urgent relief to the City’s small businesses.

In total, Stringer advocated for six relief measures including a two-month suspension of New York City Commercial Rent Tax payments for ground-floor retail businesses with demonstrated business losses; and a limited State sales taxes holiday for all restaurants, hotels and street-level retail stores. All told, Comptroller Stringer admitted that the six measures he recommended “would cost the City and the State millions of dollars in lost revenue, on top of the projected lost sales, income and other tax revenues caused by the current crisis—at least $3 billion in the next six months, according to our estimate—and likely more as long as we are still fighting to contain this pandemic.”

“But we have no choice” Stringer continued, “City and State governments are the front line of the response; we see up close what our residents and businesses need, and are best positioned to respond with meaningful help immediately.” The City and State have yet to respond to Stringer’s letter.

These are just two examples of ongoing local efforts being implemented across the country to help taxpayers deal with the unprecedented circumstances presented by COVID-19.

© 2020 McDermott Will & EmeryNational Law Review, Volume X, Number 80

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About this Author

Kathleen Quinn, McDermott Will, State Tax Matters Lawyer, Corporate Development Attorney
Associate

Kathleen Quinn focuses her practice on state and local tax matters. She has represented corporations and individuals in New York State and New York City income tax controversies. She also has advised clients on the state and local consequences of corporate restructurings and other business transactions.

Previously, Kathleen worked at a Big Four accounting firm, where her practice focused exclusively on state and local tax.

(212) 547-5718
Elle Kaiser McDermott Will Emery SF Tax  State & Local Tax  Tax Controversies
Associate

Elle Kaiser focuses her practice on state and local tax (SALT) matters. She advises clients in various industries, including technology, banking, consumer products, energy, insurance, retail and transportation. Elle is experienced in both tax planning and tax disputes.

Elle has been involved in all phases of the discovery process through administrative appeals and in court. Elle identifies audit strategies, coordinates factual and legal development of issues, and drafts responses to multiple information document requests and audit issue presentation sheets from tax authorities.

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