Taxation: Federal Consolidated Appropriations Act, 2021: Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act: shuttered venue operator grants.
The immediate effect of AB 1612 will grant tax relief to businesses that qualify for shuttered venue operator grants. This bill aims to alleviate the financial distress resulting from pandemic-related closures, with the intention of helping these businesses stabilize and recover. Additionally, the legislation prohibits any reductions in tax deductions related to these grants, ensuring that eligibility for the grants does not adversely affect the entities’ tax attributes, thus providing comprehensive support during a critical recovery phase.
Assembly Bill 1612, introduced by Assembly Member Burke, seeks to amend the Revenue and Taxation Code by adding sections that would provide certain tax exclusions for amounts received as shuttered venue operator grants, in alignment with federal legislation enacted as part of the Consolidated Appropriations Act of 2021. This bill primarily addresses the financial hardships faced by live venue operators, theatrical producers, and other entities impacted by the COVID-19 pandemic, by excluding these grant amounts from gross income for tax purposes starting from taxable years beginning on or after January 1, 2019.
While many stakeholders support the bill as necessary for economic recovery, notable points of contention could arise regarding the delineation of eligible entities. The bill specifically designates 'ineligible entities'—publicly-traded companies and those failing to meet certain gross receipt criteria—as unable to benefit from the proposed tax measures. Critics might argue that this approach could inadvertently exclude smaller organizations that nonetheless face significant challenges. The ongoing evaluation of the bill's impact on various sectors will be crucial in assessing its effectiveness in achieving its stated goals while addressing the needs of affected businesses.