The State weighs on the tax exemption of PPP loans | Regional news
BOSTON – Senate Speaker Karen Spilka on Wednesday expressed support for exempting federally backed pandemic business loans from state taxes.
In remarks to North Shore business leaders at a live broadcast event, Spilka said she “agrees” that the federal paycheck protection program grants received last year by dozens of thousands of Massachusetts businesses should not be taxed.
“I think it would hurt small businesses in particular,” said Spilka, a Democrat from Ashland. “When they took the money for the loans, a lot of small businesses didn’t know they would be taxed, and that could add up to a significant amount. “
Spilka said many Main Street businesses are still struggling due to the pandemic, and “it doesn’t make sense” to tax them for loans. She said business leaders can “expect action” on the issue “soon enough”.
Administration and Finance Secretary Michael Heffernan told House and Senate lawmakers on Tuesday that the Baker administration was in talks to remove taxes on relief payments issued by states and on certain federal loans.
“What we are actively discussing with our counterparts in the legislature is to make the PPP at the income level, which mainly affects small businesses, exempt from tax at the state level,” Heffernan said during the report. a live audition on the budget.
Heffernan said the combined taxes owed by businesses in Massachusetts on federal and state recovery grants are about $ 175 million.
Nearly 118,000 Massachusetts businesses have been approved for PPP loans, totaling more than $ 14 billion, according to the US Small Business Administration. About 46% of PPP loans were around $ 25,000 or less, according to the SBA.
The intention of the PPP program was to help small businesses keep workers on the payroll even when many were forced to shut down by state and local governments to prevent the spread of COVID-19.
Businesses can apply to the SBA for a 100% discount on their loan for up to 10 months after the funds are used, provided the money is used for qualifying expenses such as rent, mortgage interest and utilities.
Congress has exempted canceled PPP loans from federal income tax, but Massachusetts is one of 18 states, including New Hampshire, that are on track to tax the loans, according to the Washington-based Tax Foundation. , DC.
Spilka also touted legislative efforts to provide more help to struggling Main Street traders at the event, hosted by the North Shore Alliance for Economic Development.
Salem Mayor Kim Driscoll, who moderated the event, said Beacon Hill’s help was helpful. She noted that the latest figures on tax collections suggest the state may be “on the verge of recovery”, but stressed that many business owners without access to capital “are still struggling.”
Christian M. Wade covers the Massachusetts Statehouse for newspapers and the North of Boston Media Group websites.