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NFIB Working to Try and Prevent State Tax on PPP Loans

NFIB Working to Try and Prevent State Tax on PPP Loans

January 20, 2021

NFIB Working to Try and Prevent State Tax on PPP Loans

Many small businesses that file their taxes as pass-through entities may now face state taxes on their forgiven PPP loans because of the way Massachusetts conforms to the federal tax code. The Paycheck Protection Program was designed to ensure small businesses facing COVID restrictions, shutdowns, and rollbacks would be granted federal funds to keep their businesses running and prevent widespread closures. Business owners were told that if they followed the specific funding uses (payroll, rent, utilities, etc.) that the loans would be forgiven in full, but that is not necessarily true in Massachusetts. It is important to note, businesses filing as corporations will not face state taxes.

Language to fix this issue and prevent pass-through entities from facing state taxes on forgiven PPP loans was included in the state senate’s economic development bill but failed to make it through the conference committee process. Recently, NBC Boston aired an investigative piece on the taxable PPP loans interviewing several small business owners.  

NFIB urges all members to contact their legislators using our issue alert to ensure struggling small businesses aren’t forced to pay state taxes on their PPP loans. Take action by clicking here.

 

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