No Taxation Without Operation Act
No Taxation Without Operation Act would suspend federal individual income tax collection during any lapse in federal appropriations (i.e., during a partial or full government shutdown). While a shutdown lasts, ordinary federal income tax liability on wages, and the accrual of penalties or interest on any federal income tax payment or return, would be paused. The bill also provides that backpay for furloughed federal employees or contractors covered by the Government Employee Fair Treatment Act of 2019 would not be taxed as federal income, and it would require the Treasury to issue guidelines to employers on how to implement these provisions for tipped, hourly, salaried, and other employees. The act defines a shutdown as any period when a lapse in appropriations results in partial or full government shutdown.
Key Points
- 1During a partial or full government shutdown, ordinary federal income tax liability on wages is suspended.
- 2Penalties or interest on federal individual income tax payments or returns would not accrue during the shutdown.
- 3Backpay for furloughed federal employees or contractors covered by the Government Employee Fair Treatment Act of 2019 would not be subject to federal income taxes.
- 4The Treasury Department must issue guidelines to employers to ensure compliance for tipped, hourly wage, salaried, and other covered employees.
- 5The term “partial or full government shutdown” is defined as any period in which a lapse in federal appropriations causes a shutdown.