Charles Caulkins | Special to The News-Press
It is not often the government sends a tax refund to Florida businesses, but that is exactly what happened on June 28, 2021. I opened my mail to discover a reimbursement check from the Florida Department of Financial Services signed by Florida Chief Financial Officer Jimmy Patronis. I had remitted my tax before the April 30 deadline, coincidentally, the same day the 2021 regular legislative session ended. Like many businesses, I paid more in unemployment taxes this year, due to the pandemic. So, what was the purpose of this refund? The refund check was for an over payment of a reemployment tax, also known as an unemployment tax.
Thanks to the wise leadership of Governor Ron DeSantis, Senate President Wilton Simpson, and House Speaker Chris Sprowls, the Florida Legislature passed Florida Chamber-backed Senate Bill 50, that should circumvent an estimated $713 million tax increase on Florida businesses this year due to COVID related increased unemployment compensation taxes. Businesses were hit hard by the pandemic, with many having to shutter doors, limit capacity, and layoff or furlough employees until economic conditions improved. This obviously had a significant impact on Florida’s Unemployment Compensation Trust Fund. The Fund was largely depleted, resulting in automatic tax increases to most Florida employers.
A $713 million tax increase resulted in an increase from $7.00 to $20.30 per employee for minimum rate employers. The fact is future years would have resulted in even bigger increases. Projections show that employers would be paying $80.00+ per employee at the minimum rate until the trust fund was replenished or unless the Legislature stepped in. That’s a minimum rate of $80 instead of $7 per employee!
As Chair of the Florida Chamber of Commerce, I’ve seen first-hand how proactive the Florida Chamber team has been to minimize the impact of the pandemic on the business community. From having conversations as early as March 2020 on the immediate need for COVID-19 liability protections, to establishing a help desk to answer business questions on executive orders, to ensuring that COVID-19 is considered a “non-chargeable” event for unemployment tax purposes, the Florida Chamber has been leading the charge to assist the business community through difficult times.
When 2021 unemployment tax notices were released in late 2020, the Florida Chamber established a working group to examine options on how to mitigate these tax increases. Prior to the legislative session, the Florida Chamber led by uniting the business community in a letter to the Governor and legislative leaders to ask that they use their executive or legislative authority to avoid hundreds of millions of dollars in increased taxes when local businesses could least afford it.
The Governor, Senate President and House Speaker judiciously diverted expected increased revenue due to internet sales tax compliance into the Unemployment Compensation Trust Fund. Until the Trust Fund is replenished to its pre-pandemic balance, roughly $1 billion will be transferred from General Revenue to the Trust Fund annually, avoiding significant tax increases on Florida job creators.
Those of us that paid our state unemployment taxes prior to this legislation taking effect are now seeing the first-year result of SB 50- refund checks. The impact of SB 50 will continue over the next few years. Of great significance is the bill will now hold the business community harmless from a potentially incalculable recession created by the pandemic.
Please join me in thanking the sponsors of this important legislation, as well as Governor DeSantis, Senate President Simpson, and House Speaker Sprowls for eliminating a significant tax increase on local businesses. By eliminating this burden, the business community can focus on what they do best: creating jobs, reinvesting in our communities and doing our part to continue Florida’s exceptional economic momentum.
Charles Caulkins serves as Chair of the Florida Chamber of Commerce and is a Partner at the Fisher Phillips law firm in Ft. Lauderdale.