By James Nani

Law360 (April 9, 2020, 6:30 PM EDT) -- Florida's governor has signed a bill that includes sales tax holidays, insurance premium tax cuts and changes to corporate tax refunds but omits proposed cuts for telecommunications and commercial rent taxes out of fears COVID-19 will slow the state's economy.

Republican Gov. Ron DeSantis signed H.B. 7097 on Wednesday. The stripped-down bill passed the state Senate by a 36-2 vote on March 16, and the House concurred in the amendments on the same day by a 104-8 vote.

The law will cost the state and localities an estimated $47.4 million in nonrecurring revenue for fiscal year 2021, according to a fiscal note.

The law creates a three-day back-to-school tax holiday in early August and a seven-day tax holiday for disaster preparedness in May and June. It also cuts the tax rate on surplus line insurance premiums, which protect against abnormally high risks, from 5% to 4.94%. The new rate is extended to all policies regardless of where the insured risk is located, according to a bill analysis.

The law will allow tax credits taken under certain parts of state law to count toward the calculation for the final tax liability for corporate income tax refunds. The state's corporate tax refund policy, enacted in response to the federal Tax Cuts and Jobs Act , is projected to refund $543.2 million by May 1 to large corporate taxpayers.

The law also amends the requirements for hospitals to qualify for a charitable property tax exemption by requiring nonprofit hospitals to document the value of charitable services they provide and limiting their current charity tax exemption to the value of that charity care. The bill makes several other property tax changes and various administrative changes related to the state Department of Revenue.

The tax package, as it came from the House, was initially expanded by a Senate committee but was trimmed after jurisdictions across the country carried out measures to contain the spread of the novel coronavirus, which causes COVID-19, a respiratory disease.

Ultimately, the Florida Senate stripped out a proposed cut to the state's communications service taxes of half a percentage point, which was estimated to cost the state $50 million and localities $9.6 million in recurring revenue. The state's general communications service tax, which is imposed on telecommunications services, cable and video service, would have gone from 4.92% to 4.42%, and the state's tax on direct-to-home satellite services would have gone from 9.07% to 8.57%.

Sen. Kelli Stargel, R-Lakeland, said last month the tax-cut package had to be limited to ensure the state was being fiscally responsible, given Florida's current situation in dealing with the pandemic.

A proposed cut to the state's sales tax rate on the rental of commercial real estate, from 5.5% to 5.4% beginning in 2021, was also removed.

Additionally, a proposed $2 million credit for car rental companies was cut out of the law. The credit would have been provided to a company for 2018 if its tax liability was greater than $15 million and at least 700% greater than its final tax liability for its previous taxable year before the TCJA. The credit was meant to mitigate the effect of the TCJA, which disallowed companies from deferring payment of tax on income earned by the selling of personal or intangible property, according to a sponsor of H.B. 7097, Rep. Bryan Avila, R-Miami Springs.

Rental companies previously could defer tax on income earned from selling used vehicles, but the TCJA allows deferral only for real property exchanges, leaving rental car companies on the hook for years of corporate taxes.

The law also doesn't include a previous proposal for a sales tax exemption for tickets to Formula One Grand Prix races in the state.

Some Democratic lawmakers have called on the governor use his emergency powers to halt the $543.2 million in corporate tax refunds slated to go out in May. As fallout from the coronavirus pandemic wreaks havoc on state budgets nationwide, Florida's approach to tax policy, relying overwhelmingly on the traditional sales tax, has put it in a uniquely precarious position, some experts have said.

But the bill won support from the Florida Retail Federation, which issued a statement Wednesday thanking the governor for supporting the sales tax holidays. Scott Shalley, president and CEO of the federation, said the programs were needed more than ever.

"Not only do these important tax-free holidays provide relief to consumers buying necessities, but they will inject a shot of adrenaline into Florida's retail businesses after suffering through the COVID-19 pandemic and forced closures," Shalley said.

Avila did not respond to requests for comment on Thursday.

DeSantis' office did not respond to requests for comment.

--Editing by Neil Cohen.

For a reprint of this article, please contact reprints@law360.com.