Arizona taxpayers and people who have lost their jobs because of the COVID-19 crisis got a little good news from Gov. Doug Ducey last week.
In one executive order, Gov. Doug Ducey set the deadline for filing income taxes this year to July 15, only deferring the need to fill out the tax forms but also to pay anything still owed the state.
Ducey also waived certain existing requirements for those who want unemployment insurance – including having to wait a week before getting the first check.
Potentially more significant, the order means that those who are out of work and receiving payments do not have to comply with existing laws that require they actually be out and searching for employment to keep those checks coming.
Christina Corieri, an advisor to Ducey, said these changes are good for at least the next two weeks. She said the governor will reevaluate them at that time to decide whether they remain necessary.
Corieri also said that there could be even broader relief in the future – and not just for those whose employment is affected by the pandemic.
She said the governor is aware that Arizona’s maximum weekly benefit of $240 a week has not been altered since 2004. During that time the state’s minimum wage has gone from $5.15 an hour to $12 now.
“We are looking at a variety of options,’’ Corieri said.
“We understand the pain that is out there and these folks that have lost their employment and their livelihood and need assistance,’’ she said. “And we are going to have additional actions that will be announced in the coming weeks.’’
Corieri acknowledged that, unlike changing the rules on who is eligible for benefits, the cap on payments is set in statute. And that would require the governor to get approval from lawmakers.
“The Legislature is still able to come and vote,’’ Corieri said.
In waiving the rules, Ducey is taking advantage of permission granted to the states by the U.S. Department of Labor which sets some of the overall parameters for eligibility.
Some of the changes are simply tweaks to existing rules which entitle people who are laid off through no fault of their own to up to six months of benefits equal to half their salary - with that $240 state-set statutory cap, the second lowest in the country, behind only Mississippi.
For example, it makes clear that people can collect benefits if their employer has closed up shop, whether permanently or temporarily, due to the virus. But payments would be made only to those who are not still getting checks from their employers.
The executive order also spells out that benefits are available to those who are required to be quarantined.
And workers can leave their jobs and still be eligible for unemployment payments “due to risk of exposure or infection.’’
Corieri said there is no clear definition at the moment of what constitutes a risk that would justify quitting a job and still collecting benefits.
The order also allows someone to quit and get weekly jobless checks “to care for a family member who’s been infected.’’
More people collecting benefits means more money being paid out of the trust fund which is financed by a tax paid by employers on the first $7,000 of each worker’s salary.
The actual levy is linked to an employer’s record, with those who have a record of firing or laying off workers paying more than companies that have few or no layoffs.
Ducey’s order says that the fact that a worker gets to collect benefits under the waived provisions due to COVID-19 will not count against that company’s experience rating.
But that still leaves the fact that someone has to pay to replenish the fund which is required to be self-supporting.
“We understand that,’’ Corieri said. She said, though, the immediate goal was to provide financial relief both to people who were put out of work by the virus as well as to small employers.
The order postponing the tax filing deadline also means there will be no interest or penalties for late payments.
The move is not a surprise. It comes on the heels of a similar announcement by Treasury Secretary Steven Mnuchin that the Internal Revenue Service moved its deadline due to disruptions caused by COVID-19.
What makes it more important here is that Arizona is a “piggy back’’ state.
That means computations for the state income tax form begin with the federally adjusted gross income. And that makes preparing a state tax return difficult, if not impossible, without first completing the federal form.
For many Arizonans, the announcement will make no difference.
Ed Greenberg, spokesman for the state Department of Revenue, said more than 1.7 million individual income tax returns already have been filed with his agency. That’s about 140,000 more than the same time last year.
It also represents close to half of the total returns the state expects to get.
There could be financial implications for the state for the delay.
Any returns filed by the new deadline will be in the new fiscal year. That means that money that was owed, which would have been paid by April 15 will not come in to balance the books for the current budget year.
But it also means that the state won’t have to pay out money due in refunds until the next fiscal year.
One thing that won’t change is the deadline for individuals to make donations to qualifying charities to be able to get dollar-for-dollar credits on income taxes owed. Those still have to be made by the April 15 deadline.