With a growing number of people facing employment reductions or uncertainty as a result of the spread of coronavirus, Iowa, like many states and the federal government, has extended the deadline for payment of personal and corporate income taxes to help negate the impact of the increasingly worrisome pandemic on the economy.
The deadline to pay state individual and corporate income tax has been extended from April 30 to July 30. While the due date for individual and corporate income tax has been moved to the 2020-21 fiscal year, state Sen. Dan Dawson, R-Council Bluffs, said the change should have only limited impact on state services.
For the fiscal year that ended June 30, 2019, the state collected about $3.8 billion in personal income tax, $498 million in corporate income tax and $2.2 billion in sales tax.
Dawson said the personal income tax number includes individuals and the vast majority of Iowa businesses, with corporate income taxes representing only about 7% of the state’s businesses and industries. So far this year, tax revenues collected include $3.1 billion is personal income taxes, $2.2 billion in sales tax and $395 million in corporate income taxes.
Dawson said the state has reserves that will cover any shortfalls attributable to the current income tax extension.
Before the Legislature adjourned because of the pandemic, lawmakers agreed to give Gov. Kim Reynolds limited access to a $200 million Economic Emergency Fund. Reynolds was given access to 10% of that fund without limitations to fund the state’s responses to the pandemic. Expenditures beyond the 10% already approved, Dawson said, would have to be approved by the Legislature’s executive committee.
In addition to the Economic Emergency Fund, Dawson said the state has about $1 billion in the Rainy Day Fund that could be tapped should the need arise.
While city and county property taxes payments are normally due on March 31, Reynolds issued a proclamation on March 19 that waves the late penalty on property tax payments through April 16.
While the extension could impact city and county revenue streams, Pottawattamie County Treasurer Lea Voss said the impact would be minimal. With nearly a week until the normal March 31 deadline, about 75% of property tax bills have already been paid.
Justin Schultz, chairman of the Pottawattamie County Board of Supervisors, said the county’s reserve fund is adequate to meet any foreseeable financial problems resulting from the pandemic in terms of property taxes.
But with casinos closed because of the pandemic, Schultz said the county will lose about $170,000 a month in gaming revenues. That revenue will not be replaced, but he underscored the fact that gaming revenues are not used for the county’s day-to-day operations.
Like Schultz, Council Bluffs Mayor Matt Walsh said the city has ample cash reserves to weather the current downturn in the economy caused by the pandemic.
He said when the city’s finance director checked with the County Treasurer Lea Voss last week, she was told that about 65% of the sales tax bills had already been paid. Voss said Tuesday that the percentage has now risen to about 75%.
Walsh said the city budget normally includes $2.8 million in revenue from the city’s hotel-motel tax and $2.73 million in gaming tax revenues. How those funds will be impacted by the current shutdowns remains to be seen.
“We’re not really concerned about continued city operations,” Walsh said. “We’ll continue to do what we need to do.”