COVID-19 puts business tax incentives at risk
Q&A with Tony Mastinpublished in The Oklahoman | May 15, 2020
Tax incentives are increasingly used by cities, and sometimes states, to lure businesses to the area. Most involve some sort of tax break for the incoming business in return for negotiated levels of capital investment, quality jobs or new revenues generated.
With the breakout of the new coronavirus, companies globally are forced to weather dramatic drops in business and many are forced to lay off employees. These negative outcomes could affect businesses that have received incentives in the past if the terms of their agreements can’t be met.
In a business Q&A in The Oklahoman, McAfee & Taft tax lawyer Tony Mastin said that layoffs and furloughs caused by COVID-19 could put state tax incentives awarded to them in jeopardy.
“There are several provisions in state law that provide tax deductions, exemptions, credits, payment incentives or other tax preferences to incentivize companies to relocate to the state, increase wages or hire new employees,” Mastin said. “Some provisions specifically state businesses no longer will qualify if they experience a decrease in payroll or number of employees.”
Mastin told The Oklahoman that there are efforts in the Oklahoma Legislature to prevent businesses from losing these incentives.
“Senate Bill 1075, which passed the State Senate on May 13, provides that recipients of Quality Jobs Program incentive payments that fail to meet their payroll requirements from April 1 through June 30, 2021, will continue to receive their incentive payments.”