The hospitality industry in North Carolina is asking state legislators to conform to tax changes in the federal coronavirus economic relief bill and to provide state tax relief to help mitigate the economic effects of the COVID-19 pandemic on their businesses.
The North Carolina Restaurant and Lodging Association has urged members of a working group appointed to respond to the crisis to amend the state tax code to mirror changes in the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-136), signed into law March 27.
According to the working group’s March 31 meeting materials, the association requested that legislators conform the tax code to changes in the federal act that delay payment of employer payroll taxes, allow net operating loss carrybacks, depreciate qualified improvement property renovations over 15 years rather than 39, and create an employee retention tax credit.
The association recommended other state tax relief as well.
Those suggestions include: deferring state sales tax payments from North Carolina restaurants and hotels for four months and waiving interest and penalties, retroactive to March 1; suspending a requirement that hotels and restaurants prepay 65 percent of estimated sales tax liability based on collections from the same month in the previous year; deferring state income taxes for four months, with no interest and penalties on an employer’s share of payroll taxes, retroactive to March 1; and establishing a state payroll tax credit for paid leave.
The association also suggested reducing or delaying payment of city and county property taxes on restaurants and hotels and providing a prompt refund of overpayment of income taxes.
In presentation slides, the association said the “forced shut down of restaurant operations combined with the dramatic decrease in hotel occupancy has left the hospitality industry decimated” by the COVID-19 pandemic.
Joseph Kyzer, spokesman for House Speaker Tim Moore (R), said Moore has been working with state agencies to identify and provide as much tax relief as possible during the crisis.
Noting that the state Department of Revenue issued March 31 guidance expanding penalty relief for a variety of tax types, Kyzer said the update “is a good example of agencies working to do as much as they can within their existing authority.”
“When the legislature returns, other reforms the General Assembly must enact, such as ensuring the accrual of interest on taxes is waived, will be taken up to provide additional relief,” Kyzer added.
“The hospitality industry is probably the hardest hit sector in the economy, and we recognize the need for assistance,” said Pat Ryan, spokesman for Senate President Pro Tempore Phil Berger (R). “Legislative leaders and the executive branch are working together on a COVID-19 relief package, and all recommendations such as these will certainly be part of the conversation.”
In other news, North Carolina’s legislative leaders and Gov. Roy Cooper (D) announced bipartisan support March 31 for legislation to defer accrual of interest on income taxes retroactively.