A BILL that would exclude local stimulus payments from taxation has been passed by both the House of Representatives and the Senate and now heads to the governor’s desk for action.
Introduced by the Democratic-Independent leadership bloc, House Bill 22-120 would amend Title 4 (Economic Resources), Division 1 (Revenue and Taxation), Subsection 1202 (Earnings Tax) of the Commonwealth Code to include a portion that would prohibit taxation on local stimulus payments.
These include stimulus payments received from the Commonwealth pursuant to the 2021 and 2022 ARPA Local Stimulus Plan, and any subsequent stimulus payments.
According to the CNMI 2022 Recovery Plan Performance Report on State and Local Fiscal Recovery Funds, two rounds of $500 stimulus were distributed to all CNMI taxpayers and their dependents via prepaid debit card to promote spending these stimulus funds in the Commonwealth.
The CNMI Local Stimulus Project, or “Project 8899210030,” had $47.1 million in funding. The program, which was designed to assist all CNMI families that experienced financial hardships due to the Covid-19 pandemic economy, was administered through the CNMI Department of Finance-Division of Revenue and Taxation.
Anyone who filed their 2020 or 2019 tax return in the CNMI was eligible, provided that they were not being claimed as a dependent by another taxpayer.
For those with no filing requirement, such as individuals with no income, they had to file a tax return to receive a payment. There were no income limits to receive a local stimulus payment.
Each taxpayer received $500, plus an additional $500 per dependent included on their tax return. The funds were only made available through a local stimulus prepaid card, which could only be used within the CNMI.
The cards, which had expiration dates, were mailed to the primary tax filers based on addresses shown on their tax returns.
