The NFIB Small Business Legal Center has filed an amicus brief in the U.S. District Court for the Northern District of Alabama supporting Alabama in its challenge to the provision of the American Rescue Plan Act of 2021 that would prevent states from using federal funds for state tax relief for small business owners.
“Small businesses are still struggling to rebound from the COVID-19 pandemic and need as much financial relief as possible,” said Karen Harned, Executive Director of NFIB’s Small Business Legal Center. “Congress passed the American Rescue Plan to relieve some of the financial pressure caused by the pandemic, but a provision that blocks Alabama and other states from cutting taxes is eroding state sovereignty and hurts local businesses.”
Earlier, state Attorney General Steve Marshall joined 12 other state attorneys general in a federal lawsuit questioning Treasury Secretary Janet Yellen over part of the $1.9 trillion American Rescue Plan (ARP) Act that prevents states from using the funds they receive from the law to offset tax cuts.
NFIB State Director Rosemary Elebash said, “The pandemic took a tremendous toll on Alabama’s small businesses. Owners simply can’t afford to pay higher taxes. Using federal funds to avoid a tax increase would go a long way toward helping owners keep the lights on and keep people employed.”
The American Rescue Plan Act of 2021 made funds available to states if and only if states agree to not pass any laws or take any administrative actions that decrease their net revenue, whether that decrease comes through tax credits, rebates, reductions in tax credits, or new or expanded deductions. NFIB believes the court should block this unprecedented tax mandate and grant the states’ motion for a preliminary injunction.
The NFIB Small Business Legal Center protects the rights of small business owners in the nation’s courts. NFIB is currently active in more than 40 cases in federal and state courts across the country and in the U.S. Supreme Court.