While the $3 trillion in federal government funding put into the American economy in the name of coronavirus relief under the CARES Act have been a lifeline for many, in Alabama some of those benefits are considered taxable income.
State Sen. Dan Roberts (R-Mountain Brook) argues an act of the legislature will be required to remove the state tax liability on residents. He contends that with the legislature not set to convene until February 2021, a special session is needed to deal with the issue given the next general session would come after a time when tax documents are prepared.
Roberts told Mobile radio’s FM Talk 106.5 he does not believe anyone in state government intends for COVID-19 relief to be taxed at the state level.
“As we all know, the CARES Act provision, and that’s the Coronavirus Aid Relief and Economic Securities Act, which provided for the $1,200 stimulus to each individual, then $500 per child — on top of an additional $600 [per week] for unemployment,” he said. “Those things have come in, and then you have the [Paycheck] Protection Program to encourage and help corporations who were struggling to be able to help keep employees employed. The goal of that from the federal level is that those dollars will not be taxed on our federal returns. The challenge is working with our Department of Revenue, the executive branch, Governor Ivey’s staff down – no one intends to tax that. That’s the intent.”
“But right now, we don’t have a mechanism to do that statutorily, which would be by law,” Roberts continued. “So the objective is – one could argue, well you could do that. We go back February 2, but if we wait until February 2, well all know that our W2s, K1s, 1099s all come out in January. So, I don’t believe our Alabama Society of CPA individuals and others that produce that want to do it twice. So that’s why we would want to do that and get it correct the first time.”
Roberts acknowledged the logistical difficulties in staging a special session under the coronavirus threat.
“I think the governor has a real challenging decision here,” Roberts said. “And I think it will be predicated on how the virus is doing as we move along in to the fall. If it is not looking well, then I think that’s going to make it very difficult for us to come back – just the physical constraints that we have in the Statehouse to gather makes social distancing really a challenge.”
Roberts said that in addition to the tax issue, there was also a need for the Alabama legislature to deal with the coronavirus related liability issue, as well as economic incentivizes set to expire later this year.
“There are some very valid reasons to come back,” Roberts said.
@Jeff_Poor is a graduate of Auburn University and the University of South Alabama, the editor of Breitbart TV, a columnist for Mobile’s Lagniappe Weekly and host of Mobile’s “The Jeff Poor Show” from 9 a.m.-12 p.m. on FM Talk 106.5.
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