Small Business Tax Relief Bill Awaits Governor’s Signature

Small Business Tax Relief Bill Awaits Governor’s Signature

On Wednesday, a bill which revises state tax structure passed out of the Arizona House of Representatives on a bipartisan vote and is on its way to Gov. Doug Ducey’s desk. HB 2838, sponsored by Rep. Joseph Chaplik, has no fiscal impact on Arizona cities and towns.

Chaplik says the bill “protects small business from over taxation by the federal government, without impacting the state general fund.”

“Providing Arizona’s small businesses with more working capital and tax relief at this critical moment, without having a negative fiscal impact to the state, is responsible public policy,” said Chaplik.

The 2017 Federal Tax Cuts and Jobs Act (TCJA) placed a cap of $10,000 on the amount of state and local taxes (SALT) that an individual can deduct on their federal taxes. Experts say this hurts employers organized as S Corporations, partnerships and limited liability companies that pay taxes on business profits at the individual level. This has negatively impacted main street businesses by:

  • Increasing federal taxes for main street employers.
  • Putting main street employers at a disadvantage when compared with C corporations, which are not subject to the new SALT cap.
  • Putting Arizona’s main street employers at a disadvantage when compared to businesses operating in states that have already adopted SALT parity reform.

Fifteen states have already adopted SALT parity legislation since 2017, including: Connecticut, Wisconsin, Oklahoma, Oregon, Louisiana, Rhode Island, New Jersey, and Maryland. SALT parity legislation is currently advancing in North Carolina, Pennsylvania, Michigan, Illinois, Colorado, Massachusetts, Ohio, and California.

On November 9, 2020, the Department of Treasury and the IRS announced proposed regulations supporting state enacted SALT reform: “The Department of Treasury and IRS are taking the necessary steps to provide fairness for America’s small businesses. These proposed regulations will offer clarity for individual owners of pass-through entities.”

The bill was amended in the Finance Committee to ensure that the mechanics of the legislation are consistent with Arizona law, and the Senate Floor Amendment to the Finance Committee amendment was the result of successful discussions with the Executive and the Arizona Department of Revenue. The amendment clarifies how partners and shareholders can opt out of the election, and changes the retroactivity date from January 1, 2018, to January 1, 2021. This is consistent with other states that have adopted SALT parity.

Arizona Governor Signs “Mask Freedom” Bill

Arizona Governor Signs “Mask Freedom” Bill

PHOENIX — Governor Doug Ducey signed Rep. Joseph Chaplik’s bill, HB 2770, which empowers businesses in Arizona to decide whether or not to enforce on its premises a mask mandate that is imposed by politicians from the state, county, city/town or other jurisdiction in Arizona.

Chaplik says he proposed the measure because “business owners should be allowed to decide for themselves whether to require their customers to wear masks.”

“Recent developments show that without a protection in law, businesses and their customers are subject to the decisions of local rogue politicians who want to control you indefinitely,” said Chaplik. “This bill did not receive any Democrat votes throughout the entire process.”

The Free Enterprise club called Chaplik’s bill a “a commonsense solution” because it “allows people to exercise their freedom while removing the burden from businesses to play mask police.”

RELATED ARTICLE: Governor Ducey Should Follow The Science By Signing The “Mask Freedom” Bill

The governor issued an executive order last month banning local mask mandates, however several cities run by Democrats have refused to rescind their mask mandates. The governor never issued a mandatory state-wide mask mandate, but several democrat-controlled cities did. Those cities then failed to enforce their mandates, leaving the responsibility to local businesses. The governor said in the bill’s transmittal letter to  Secretary of State Katie Hobbs that the cities’ failure caused “concern and heartache for many businesses.”

The governor called Chaplik’s bill “well-intentioned,” in his letter of transmittal, but “due to an error in drafting, may have unintended consequences.”

“Some rational mass requirements are not related to the spread of COVID-19 may not be enforceable,” explained the governor. “The state needs to be able to enforce long-standing workplace safety and infection control standards unrelated to COVID-19. I am grateful to the sponsor, Rep. Joseph Chaplik, for agreeing to fix this technical oversight in a future bill this session. With his commitment to fix this oversight, I am signing this bill, ensuring that our small businesses will no longer be required to enforce mandates imposed on them by the cities who are choosing not to force it themselves.”