Senate Bill S4355

                                
 
BILL NUMBER: S4355

SPONSOR: KAPLAN
 
TITLE OF BILL:

An act to amend the tax law, in relation to excluding from state income
tax certain pandemic relief funds

 
SUMMARY OF SPECIFIC PROVISIONS:

Section 1 ads a new section 622 to the tax law to state that pandemic
relief funds received by a New York resident pursuant to the Federal
Pandemic Unemployment Compensation

(FPUC) shall be exempt from state taxation. This section further states
that the funds received pursuant to the Lost Wages Assistance Program
shall also be free from state income tax.

Section 2 is the effective date.

 
JUSTIFICATION:
              

To help address mass unemployment and assist individuals who lost their
jobs, the Federal government enacted various measures providing addi-
tional assistance beyond traditional unemployment. One such avenue
created was the Federal Pandemic Unemployment Compensation program, that
provided an amount of initially $600 a week per individual, which ended
on July 31, 2020.  Subsequent to that, the lost wage assistance program
was created that put $300 into New Yorkers pockets for a period of six
weeks. A new CARES Act passed in December which reauthorized an addi-
tional $300 a week under the FPUC.

These funds have proven to be invaluable to New Yorkers struggling to
make ends meet. However, there is a problem on the horizon. Under
current law, an individual who is receiving Unemployment is notified
they may choose to withhold state and/or federal taxes from their bene-
fit or may have it deducted. This is a personal decision, as some indi-
viduals need the maximum benefit up front, so they defer paying taxes on
them until they file their state tax return, while others withhold taxes
from each benefit amount to avoid being hit with a possibly large amount
when they file their taxes.

However, as structured the Federal Pandemic Unemployment Compensation,
and Lost Wage Assistance Program did not allow an individual to withhold
taxes, nor are recipients likely aware they will owe money on these
funds. What this means is that when filing their taxes in 2021 those
individuals who lost their job and can least afford a surprise on their
tax bill are likely to find a shocking unfortunate surprise in money
owed to New York. This legislation aims to provide tax relief to those
individuals most in need.

 
PRIOR LEGISLATIVE HISTORY:

New Bill.

 
FISCAL IMPACT:

To be determined.

 
EFFECTIVE DATE:
This act shall take effect immediately.