Small Businesses: Progress on Paycheck Protection Program Conformity
Tax Conformity has been a hot topic particularly for PPP loan recipients, I am proud to be a co-author of HF501 authored by the Chair for the House Tax Committee, Rep. Paul Marquart. I have heard from many of you on this topic, plain and simple, we will get this done.
As you may know, many businesses in Minnesota have suffered over the past year. To support these businesses, the federal government offered Paycheck Protection Program (PPP) loans. Prior to the Spring Break, the Minnesota Senate advanced HF 501 with a bipartisan floor vote. The bill would provide state conformity to the federal tax rules and exempt these loans from taxation.
The Senate passed a version that attempts to adopt conformity, but leaves out workers hardest hit in addition to our businesses. The House has a version of the bill that aims to do both as it also looks at workers getting an unexpected tax bill from UI wages.
One thing we know is that every business was impacted differently, some struggled tremendously to stay open and remain solvent, some barely squeaked by managing to survive, while some even flourished. Approximately 68% percent of PPP loans went to businesses who operated at a loss in 2020, and those businesses would not receive any benefit in 2020 from federal conformity. These businesses include the local restaurants, bars, fitness centers, and entertainment venues harmed the most by the pandemic. Businesses that did not receive PPP loans would see no benefit, nor would unemployment insurance recipients.
The intention of the PPP loans was to ensure the survival of these businesses. While some have been fortunate to make it through, there is no desire to punish these businesses for the courage and strength it took to get through what may be the toughest year they will ever experience.
Please know, I am committed to helping small businesses and families get back on the road to recovery. This tax filing season, please visit the Minnesota Department of Revenue’s website with information on their resources, including COVID-19 relief available for businesses, and sign up for updates.