SALES TAX SLICE: EXTENDING TAX RELIEF TO ORGANIZATIONS THAT ASSIST VICTIMS OF MASS CASUALTY CRIMES

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Last Sunday, 49 people were killed and 53 injured at Orlando’s Pulse night club. This was a devastating attack on the LGBT community and the worst mass shooting in American history. This tragedy compels discussion of a number of important issues, among them prejudice, guns, and mental health. However, in this forum (as always), I will be viewing these events through the lens of tax.  

Midday Sunday, while victims of the shooting were still being identified, Florida Governor Rick Scott ordered a state of emergency. Doing so facilitates a state’s ability to obtain assistance from out-of-state. From a tax perspective, the entry of out-of-state businesses and organizations into a state may give rise to nexus, resulting in tax obligations for which they would otherwise not be responsible. 

Recognizing that a state’s nexus thresholds should not be directed at companies and individuals entering states on a temporary basis to assist in response to a declared state emergency, the National Conference of State Legislatures proposed a model statute in 2011 exempting these companies and individuals. Notably, the exemption applies only to those entering a state to repair and rebuild infrastructure. For this reason, organizations that enter a state to assist victims of mass casualty crimes could still trigger nexus, even if the state has enacted an exemption based on the model statute. 

Earlier this year, Florida enacted a provision exempting from its use, unemployment, and other tax filing requirements businesses that enter the state solely to perform emergency-related work during a disaster response period. In addition to Florida, 22 states have enacted exemptions based on the National Conference of State Legislature’s model statute. Like in the National Conference of State Legislature’s model statute, Florida’s definition of “emergency-related work” is limited to work related to damaged infrastructure. For this reason, the exclusion will not ease the tax burden on organizations that enter the state to assist victims of Sunday’s shooting.  

For instance, in theory, the National Center for Victims of Crime could be subject to use tax on printed materials that it distributes in Orlando. The organization could face additional complications with the state’s unemployment tax requirements. The National Center for Victims of Crime is a D.C.-based organization that Equality Florida has engaged to disburse funds from its GoFundMe campaign to support victims of the Pulse nightclub shooting. As in the organization’s response to the Chattanooga and Aurora shootings, any overhead costs, including payroll for employees traveling to the community and victim service, public education, and other materials, are being paid for with separate funds.      

Other organizations that may have nexus concerns in Florida include Illinois-based Lutheran Church Charities. According to The Telegraph, Lutheran Church Charities’ K-9 Comfort Dogs group has brought golden retrievers to Orlando to console survivors of the tragedy. This is the same organization that deployed its specially trained trauma dogs in response to the Newtown school shooting and the Boston Marathon bombing.    

Should nexus exceptions for disaster response be expanded to include organizations that enter the state to assist victims of mass casualty crimes? Continue the discussion on Bloomberg BNA’s State Tax Group on LinkedIn

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