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Arkansas to Hold Special Session to Tackle Shortfall

Posted on Mar. 26, 2020

Arkansas Gov. Asa Hutchinson (R) has called a special session to address a budget shortfall resulting from the state’s decision to extend individual income tax return deadlines amid the COVID-19 pandemic.

Hutchinson announced the special session will convene March 26 at 1 p.m.

The deadline for filing and paying state individual income taxes has already been extended from April 15 to July 15.

“Many Arkansans have lost their job or had their pay cut as COVID-19 has swept through Arkansas,” the governor said in a March 25 release. “Extending the deadline for individuals to file and pay state income taxes will cost the state millions of dollars, but it is a cost the state must shoulder in order to do the right thing for taxpayers. I will ask all agencies to cut expenses where possible without cutting essential services. We will further tighten the state’s spending in order to lighten the load for Arkansans.”

During a March 23 news conference, Hutchinson said the state is following the federal government, which also provided a 90-day extension for individual income taxes, “to provide relief and consistency for individual Arkansas taxpayers.”

However, the governor said the deadlines for corporate taxes and estimated payments will remain the same for the current year.

Hutchinson said that because of the COVID-19 outbreak and the tax deadline extension, the official state revenue forecast had been lowered by $353.1 million.

“This necessitates a special session of the General Assembly to address this shortfall [with Arkansas’s] $173 [million] unallocated surplus from last year,” Hutchinson said in a March 23 tweet. “I applaud the General Assembly for their support and coordination on these tax and budget issues during this extraordinary time.”

Some groups, including the Tax Foundation and the National Taxpayers Union Foundationhave urged states to follow the IRS in delaying tax return filing and payment deadlines to provide relief amid the COVID-19 pandemic. However, the Federation of Tax Administrators has warned that the extension will cause budget and cash flow issues for states.

“We will utilize and manage the surplus to accomplish the broader mission of government, even though it’s going to be a serious belt-tightening time for all . . . except those that are on the front lines of the current crisis,” Hutchinson said.

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