The House Republican Caucus today announced a package of bills to hep businesses recover from the impact of the COVID-19 pandemic.
“We are here today to highlight some pieces of legislation that will provide Maryland’s businesses with consistency, protection, and the tax relief they need to survive the COVID-19 pandemic”, said House Minority Leader Nic Kipke. “Our party is often criticized for caring too much about business and not enough about people. But businesses are built by people, they are run by people, they create jobs for people. What impacts businesses impacts people and many Maryland businesses are struggling.”
The package of bills includes legislation to provide accountability and oversight of the decisions made by county health officers, as well as legislation to protect small businesses against frivolous and costly lawsuits related to COVID-19 restrictions. The final two bills provided tax relief for businesses and for individuals who have been financially harmed by the fallout of COVID-19.
Oversight, Consistency, and Protections for Businesses
House Bill 1083 will establish consistency and oversight of the decisions made by county health officers. The bill requires each county board of health to establish clear and understandable guidelines regarding when, how, and under what circumstances businesses can be inspected, cited, or ordered to cease operation.
“The COVID-19 public health emergency has put unprecedented power in the hands of County Health Officers”, said Delegate April Rose, who is sponsoring the legislation. “In some areas these health officers are doing a good job, while in others they’re acting with impunity, often making arbitrary decisions that appear to be based more on politics than on science. This is a tremendous amount of power in the hands of unelected and mostly unaccountable bureaucrats.”
The bill will also require each county to establish an appeals process for decisions made by the health officer and an oversight board to hear the appeals of decisions made and review any complaints of misconduct by the health officer. The oversight board must make a determination on the appeal within three days of the request. An important feature of these county oversight boards is that their membership must include at least one business owner who operates a business within the county. This treats the business community as a partner rather than a problem.
Consistency and oversight will be incredibly helpful in making Maryland’s businesses whole. But they will also need legal protections so they do not weather this storm only to be decimated by lawsuits.
HB 1084 will provide immunity from civil liability for small businesses, churches, and other nonprofits if they inadvertently fail to comply with the hodgepodge of often contradictory State and county health orders issued during this pandemic.
“Right now, small businesses, churches, and non-profit entities doing their level best to comply with all state and local pandemic mandates are at risk of being bled dry if they have to defend against lawsuits for innocent and minor violations of these orders”, said Delegate Rose. “This bill protects these small businesses and other entities from expensive and time-consuming litigation by granting them immunity from lawsuits so long as their noncompliance was not willful or due to gross negligence.”
The bill also shifts the burden of proof to the plaintiff who must prove that the noncompliance was willful or grossly negligent by clear and convincing evidence. This is a higher standard of evidence that will likely dissuade frivolous lawsuits that, can do irreparable financial harm to a business even if they win.
Together, these bills provide Maryland’s small businesses with the oversight, consistency and legal protections they need to survive.
Tax Relief for Individuals and Businesses Impacted by COVID-19
In the wake of COVID -19 some individuals and even business owners have had borrow from their future to ride out this financial storm, taking money out of their retirement plans to close financial gaps. Under the federal CARES Act, withdrawals from retirement accounts for COVID-related purposes are not subject to the penalty for early distributions under the federal tax code.
House Bill 1177 makes any COVID-19-related distribution from retirement income in the 2020 or 2021 tax year untaxable for Maryland income tax purposes.
The exemption, which is capped at $100,000, would only apply to COVID-19-related distributions as defined by the federal government. This includes distributions to individuals who tested positive for COVID-19 or had a spouse or dependent test positive. It also includes distributions to those who, due to the pandemic, experienced adverse financial consequences because they were quarantined, furloughed, laid off, had working hours reduced, were unable to work because of lack of childcare, or had their to close or reduce the hours of business they owned or operated.
“When you see someone drowning, you don’t throw them a cinder block. Taxing these distributions would do just that”, said Delegate Wayne Hartman, the bill’s sponsor. “This bill is a critical life preserver for individuals and for business owners experiencing significant economic hardships because of COVID-19.”
Delegate Hartman is also sponsoring House Bill 1176, which has the strong support of Caucus leadership. The bill that will provide tax credits to individuals and families to cover expenses for travel to Maryland destinations or attend live entertainment and sporting events in Maryland. The expenses include food and beverages, lodging, and transportation costs. It also includes expenses related to attending live entertainment, sporting events, and attending conferences or business meetings. The travel has to take place in either 2021 or 2022 and must be at least 50 miles from an individual’s residence. The tax credit is up to $4,000 for individual filers and $8,000 for married couples who file jointly, plus an additional $500 for each dependent child. The tax credit program is capped at $25 million per year.
“This bill is critical to stimulating tourism and travel in Maryland”, said Delegate Hartman. “As a representative of Ocean City, I have witnessed first-hand the utter devastation COVID has wrought in the tourism and hospitality sectors of our economy. This tax credit will encourage our citizens to travel to the many beautiful areas of our state that are in tremendous need of their patronage.”
Currently, in a number of jurisdictions across the state, businesses pay a personal property tax. This tax is assessed on all business property not classified as real property. This includes kitchen equipment, furniture, fixtures, tools, supplies, inventory, etc. The revenue generated from this tax goes into the coffers of local government.
House Bill 1257 will allow certain businesses to receive a refund of their business personal property tax they paid in 2020. In order to be eligible for the refund, the business must have been required to close or those required to significantly reduce their services under the Executive Orders the Governor issued in March 2020.
“One of our goals as we came into session was to find a way to help businesses most impacted by COVID-19 closures and lockdowns, those businesses required to close or to significantly curtail their business by executive order”, said Delegate Kevin Hornberger, the bill’s sponsor. “Restaurants who were completely shut down or had their services significantly curtailed still paid a tax on their ovens and broilers that remained cold, on the barstools that remained empty. Gyms who were forced to close still had to pay a tax on their exercise equipment that was gathering dust. Salons forced to shutter were still taxed on the chairs and dryers that sat unused. That’s just wrong. This bill will help these businesses, giving their money back to them.”
The bill is a one-time refund of personal property taxes paid in 2020. Local governments are held harmless in the bill, as the refunds will paid for by the State, utilizing the Rainy Day Fund.
“While making use of the Rainy Day Fund is not ideal, it is moments like this that call for it”, said Hornberger. “For many of Maryland’s struggling businesses, the last year has been a monsoon.”
The bills in this business relief package give businesses consistency, protection, and allow them to keep more of their hard-earned money.
“When government shuts down businesses, it has a moral responsibility to do everything in its power to put those businesses back on even footing”, said Delegate Kipke. “These bills are an important step in achieving that goal.”