The National Federation of Independent Business has filed an amicus brief in the U.S. District Court on behalf of the Northern District of Texas supporting Texas, Mississippi, challenging the provision of the American Rescue Plan Act of 2021 that prevents some state’s from using federal funds for small business tax relief.

Click here to read the brief.

“Small businesses are struggling to recover from the economic downturn caused by the COVID-19 pandemic and need as much financial relief as they can get,” said Karen Harned, Executive Director of NFIB’s Small Business Legal Center. “Congress passed the American Rescue Plan Act to ease the financial pressure on employers, but a provision that blocks states from cutting taxes erodes state sovereignty and hurts local businesses.”

NFIB State Director Dawn McVea said, “This has been a challenging and frustrating 18 months for small businesses, and this provision in the American Recovery Plan makes it even harder. State government ought to be able to enact state tax changes aimed at stimulating the economy. After all, that’s what the economic recovery is all about. Employers don’t need any additional hurdles to further delay an already slow recovery. ”

The ARPA 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 over 40 cases in federal and state courts across the country and in the U.S. Supreme Court.