NFIB California Main Street Minute

For the legislative and political week April 26-30

Welcome to the April 26 edition of the NFIB California Main Street Minute from your NFIB small-business advocacy team in Sacramento.

You Heard it Here, First

• On Wednesday, April 21, NFIB California held its hugely successful Small Business Day with special guests Dee Dee Myers, a senior advisor to Gov. Gavin Newsom and director of the Governor’s Office of Business and Economic Development (GO-Biz); Assembly Member James Ramos (D-Rancho Cucamonga), author of Assembly Bill 247, the small business liability protection bill that NFIB is co-sponsoring; and Senate Republican Leader Scott Wilk (R-Santa Clarita). Click here for a brief story on the event and scroll down to read Myers’ emphatic remarks on whether there will be any tax increases this year. NFIB members attending Small Business Day were the first to hear it.

Alas, No dice on liability protection

• Ramos’ Assembly Bill 247 was to have had its first hearing on April 21 in the Assembly Judiciary Committee, but the committee decided to postpone the hearing. You can’t call a similar measure, Assembly Bill 1313, dead, because it never seemed to have a life to start with. Have we mentioned in past Main Street Minutes that lawyers are well represented in the Legislature?

Are we there yet?

• One of NFIB California’s priority pieces of legislation is Assembly Bill 80, which would conform state tax law to the federal government’s tax law regarding the forgivability of PPP loans. It came roaring out of the State Assembly on a 37-0 vote and has now passed the State Senate. There’s just one more bump in the road to the governor’s desk for his signature: The Assembly must concur with Senate amendments. Given the bipartisan praise heaped on the bill, NFIB is expecting favorable action.

• Reports NFIB California’s chief legislative advocate, Kevin Pedrotti, who has been at the center of small business’ lobbying for AB 80, that after “finally receiving guidance from Secretary of the Treasury Janet Yellin, the Newsom Administration and State Senate finally passed state PPP tax conformity. The Assembly is expected to approve it next week and the Governor would then sign it.” AB 80 does the following:
  • Expands, for taxable years beginning on or after January 1, 2019, the existing forgiven PPP loan income exclusion to allow loans provided under the Consolidated Appropriations Act of 2021 to be excluded from income for California taxpayers.

• • Allows loans that were forgiven as an “advance grant amount” under the Economic Injury Disaster Loans (EIDL) program to be excluded from income for California taxpayers.

• • Allows businesses, except for an “ineligible entity,” to deduct business expenses that were paid for using forgiven PPP or EIDL funds.

• • Provides that, similar to the federal treatment, this bill will not require businesses, other than “ineligible entities,” to adjust their tax attributes as a result of forgiven PPP or EIDL funds.

• • Defines an “ineligible entity” as one that is either one or both of the following:
    • Does not meet the reduction in gross receipts of 25 percent or more in 2020 as compared to the same time period in 2019.
    • Is a “publicly traded company.”

Pedrotti strongly advises seeking the guidance of a tax professional when applying this law to your business.

No life in universal health care bill.

• “Assemblyman Ash Kalra, D-San Jose, announced Wednesday evening he’d pull Assembly Bill 1400 from consideration this year to give lawmakers more time figure out how to pay for it. It could come back in 2022,” reports The Sacramento Bee via MSN News. Kalra’s action is one huge worry off NFIB’s mind—for now.

More $$$ Available for Small Businesses

• Based on NFIB’s surveys of its membership and other sources, it looks as if the need for small business loans, grants, and tax credits is slowly winding down. Funny, how that is happening. Just as with the Great Recession, when politicians were constantly nattering on about “access to capital,” actual small-business owners kept telling them the solution was customers walking through the door. The small-business answer is even more so for the pandemic, which, unlike the Great Recession, ordered many business closures. For small-business owners still looking for a little financial help, the following are some side streets off the boulevard of PPP and EIDL loans. NFIB does not necessarily endorse any but believes they’re worth calling attention to.
  • Blast from the Past. Speaking of a Great Recession/COVID-19 tie-in, the recently passed American Rescue Plan Act of 2021 dusted off an Obama-era idea contained in the Small Business Jobs Act of 2010. In it was the State Small Business Credit Initiative (SSBCI), which ran some federal moolah through state commerce departments and other similarly named agencies. No one in the NFIB national office, however, can ever remember hearing of a member benefitting from SSBCI, because then, as now, the recession starting abating when – you got it! – customers started walking through the door. Still, the pandemic is not the Great Recession, so maybe this is SSBCI’s time to be a little help. Read more about it here. California was preliminarily granted $895 million.

• • Also contained in the American Rescue Plan Act was the Restaurant Revitalization Fund (RRF) “to provide funding to help restaurants and other eligible businesses keep their doors open,” according to the U.S. Small Business Administration. “This program will provide restaurants with funding equal to their pandemic-related revenue loss up to $10 million per business and no more than $5 million per physical location. Recipients are not required to repay the funding as long as funds are used for eligible uses no later than March 11, 2023.”

• • Finally, a reminder from a previous Main Street Minute. “The Spam of federal loans, grants, and tax credits. Like the unfairly maligned canned meat product, small-business owners seem to have a ‘What’s In It?’ puzzlement over the Employee Retention Tax Credit (ERTC) In the most recent survey of NFIB-member, small-business owners, 58% weren’t familiar with the ERTC and 35% were only somewhat familiar. According to the IRS, “The Employee Retention Credit is a fully refundable tax credit for employers equal to qualified wages (including allocable qualified health plan expenses) that Eligible Employers pay their employees.” Small business employers can receive up to $33,000 in refundable tax credits per employee for qualified wages paid after March 12, 2020. Want to know more? NFIB’s Elizabeth Milito, senior executive counsel of the NFIB Legal Foundation, and Holly Wade, executive director of the NFIB Research Center, have produced this informative video.

Nationally

• Speaking of the Restaurant Revitalization Fund, that is the subject of the next NFIB webinar on Wednesday, April 28, “Restaurant Revitalization Fund: What Small Businesses Need to Know Plus Updates and Answers to your PPP, EIDL, and ERTC questions.” Register here.

• The House will be back in session the week of May 10, and a potential vote on the Raise the Wage Act looms. Read NFIB’s minimum wage infographic here. Take Action here.

• On April 21, the NFIB-led Family Business Estate Tax Coalition released a study finding that reported changes to taxes at death – such as repealing stepped-up basis tax provision – would hurt small businesses and destroy jobs. The study also includes examples of step-up basis for family-owned businesses. Read more here.

Next Main Street Minute, May 2.