Tax & Accounting News
TaxBuzz Top 5 - IRS Halts ERTC, GA Gov. Suspends Gas Tax, and More
Each Friday, TaxBuzz brings you the top five tax and accounting headlines you need to know from the workweek. We know life can get busy and you don't always have time to scroll through your news feed to stay informed.
We weed through all of the week's stories to showcase the most important updates in the tax and accounting world.
1. IRS Unexpectedly Halts All Processing of ERTC Tax Credit
Yesterday, September 14, IRS Commissioner Danny Werfel unexpectedly announced that the federal tax agency will halt all processing of the Employee Retention Tax Credit (ERTC), effective immediately.
CNBC reports that Werfel spoke about the decision on a press call, stating, “This great program to help small businesses has been overtaken by aggressive promoters. It was not designed to be a gravy train for promoters, flooding the IRS with eligible applications that slow down work on ERC and other important matters for taxpayers.”
The ERTC tax credit was originally designed to support businesses and their employees during challenging times. It was introduced to help businesses retain their workforce in times of economic uncertainty, specifically those that arose during the COVID-19 pandemic.
At this time, it is unknown when -- or if -- processing of the tax credit will resume.
2. Newsom Faces Tough Choice as Legislature Passes Bill to Give Striking Workers Benefits
California Governor Gavin Newsom (D) is facing a tough decision following the state legislature's passage of a bill that would give striking workers access to unemployment benefits. If Newsom signs the bill into law, California would become only the third state in the nation, alongside New York and New Jersey, to offer such benefits.
The legislation was, of course, introduced in response to the ongoing SAG-AFTRA and WGA strikes that are deeply impacting the state's entertainment industry.
Senate Bill 799 has been strongly supported by labor unions and deeply opposed by other organizations, including the California Chamber of Commerce. If Newsom does not veto the bill, it will take effect in January 2024, and will allow striking workers to collect unemployment benefits if they do not return to work within two weeks.
The Democratic Governor has been noncommittal regarding the bill so far, previously saying he believes "one has to be cautious...before you enter the conversation about expanding its [unemployment's] utilization."
3. Kemp Suspends Georgia Gas Tax, Declares State of Emergency
Georgia Governor Brian Kemp (R) has declared a state of emergency regarding inflation, suspending The Peach State's gas tax as a result. Per a new report from FOX 5 Atlanta, Kemp indicated that his actions were in response to issues occurring at the federal level.
He said, "While high prices continue to hit family budgets, hardworking Georgians deserve real relief and that's why I signed an executive order today to deliver it directly to them at the pump."
The news outlet shared that the suspension of the tax is estimated to save Georgia residents about 31 cents per gallon of gasoline and 35 cents per gallon of diesel. This is not the first time Kemp has suspended the state's gas tax.
He previously put the tax on hold in March 2022 and extended the suspension for the following 10 months.
4. Youngkin Signs Long-Awaited Budget, Tax Cuts Into Law In VA
After a lengthy delay, Virginia Governor Glenn Youngkin (R) has signed the state's new budget, which includes numerous tax cuts, into law. Youngkin signed the legislation on the steps of the state capitol building, telling the gathered crowd, "You waited a long time for this day — too long, candidly. But we came together and got it done.”
The bipartisan budget features wins for both Republicans and Democrats, according to a Virginia Mercury report. The GOP secured nearly $1 billion in tax reductions, largely thanks to the inclusion of numerous new tax rebates. Democrats, on the other hand, received significant financial investment in various state programs.
State Senator George Barker (D-Fairfax) served as one of the Democrats’ chief budget negotiators. He told Virginia Mercury that some measures, like an additional 2% salary increase for teachers were supported by both parties.
Barker also commended Youngkin for his support of mental health spending. “He said, to his credit, ‘I’m not going to object to anything you put in on mental health,’” Barker shared.
In December 2022, Youngkin proposed his own $230 million plan to improve Virginia's behavioral healthcare system, which has faced criticism.
5. Chicago Eyes Real Estate Transfer Tax Increase to Combat Homelessness
The City of Chicago has one of the highest homeless populations in the United States, with an estimated 68,440 people experiencing homelessness during a 2021 study conducted by the Chicago Coalition For the Homeless.
Now, Mayor Brandon Johnson (D) has proposed a new plan to combat homelessness in The Windy City. The plan, called Bring Chicago Home, would significantly increase real estate transfer taxes -- paid by sellers -- on all properties sold for over $1 million.
Axios broke down the tax increases, noting that buildings sold for between $1 million and $1.5 million would see taxes rise by nearly 167% -- but only on the portion over $1 million. Properties sold for over $1.5 million would see taxes balloon by 300%, though that would, again, only apply to the portion above $1.5 million.
Proponents of the proposal point out that it would also cut transfer taxes by 20% for properties that sell under the million-dollar mark. Johnson has stated that he is "very confident" the measure will be passed by the city council, and will appear as a March 2024 ballot referendum.
What do you think about these tax news headlines this week?
Feature Image Credit: Artas/Getty Images
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