California delays sales tax payments for small businesses

Coronavirus

SACRAMENTO, Calif. (KTXL) — California’s governor on Thursday said small businesses can keep up to $50,000 in sales tax receipts for the next year as the COVID-19 outbreak has forced people to stay home and many shops to close.

The move means businesses with $5 million in sales or less will get up to a year to give the state up to $50,000 in sales taxes they collect from customers. It’s essentially an interest-free loan aimed at keeping small businesses afloat in a state where the governor has ordered everyone to stay home to prevent the spread of a virus that has so far killed 233 people.

The proposal will have a significant impact on state and local budgets, as sales taxes make up a big part of government bank accounts. State officials could not say how much it would cost, saying it depends on how many businesses can remain open to take advantage of the offer. As of Thursday, at least 20,000 businesses had asked the state for a 90-day delay in sales tax payments.

“The economic consequences are profound,” Newsom said.

At least one source of local tax money has not been touched: property taxes. State officials have given Californians an extra three months to file their state income taxes. But the state has not budged on an April 10 property tax deadline. Newsom said Thursday local governments have asked him not to waive that deadline because it is such an important source of revenue for them.

“Counties face dire cash flow challenges due to COVID-19 costs to protect communities and cannot absorb a significant loss of sales tax revenue that would directly impact funding for public safety, public health and behavioral health services,” said Graham Knaus, executive director of the California State Association of Counties.

Newsom proposed a $222.2 billion budget in January. But Thursday, he said that proposal “was no longer operable.”

“The world has radically changed since the January budget was proposed,” he said.

For those looking for work, the state has partnered with three companies — LinkedIn, Salesforce and Bitwise — to launch a website matching people with job listings in California. Newsom said the website, onwardca.org, already has more than 70,000 job listings. Most are in the health care, agriculture, logistics and grocery industries — essential businesses not affected by the statewide “stay-at-home” order.

Governors across the country are grappling with what businesses can stay open and which ones can close. In New York, Gov. Andrew Cuomo ordered non-essential construction sites to shut down. Officials in the San Francisco Bay area have done the same. But Thursday, Newsom said he was not planning on changing the state’s guidelines listing construction workers as an essential business exempt from the statewide “stay at home” order.

“The conditions in New York are very different than the conditions in the state of California,” Newsom said. “We’re not naive about magnitude of challenge ahead of us. All of this is subject to change. But currently, I’m satisfied with those state directives.”

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