Massachusetts Senator Eric Lesser proposes that small businesses not be taxed for canceled P3 loans
Massachusetts businesses that received federal loans to survive the recession during the COVID-19 pandemic could get those loans canceled, only to face a big fund tax bill in April.
Senator Eric Lesser said that is why he is proposing to amend Massachusetts income tax law so that small businesses whose paycheck protection program loans are canceled do not face a higher tax bill.
“This legislation will ensure that struggling small business owners, who have suffered unimaginable hardship over the past year, are not taxed by the state on the forgiveness amounts of their PPP loans,” the Democrat said on Friday. de Longmeadow in a press release.
Lesser, who in the last session was co-chair of the Joint Committee on Economic Development and Emerging Technologies, said the proposed changes would mirror federal tax law on forgiven loan amounts.
The law project, SD.172, has seven co-sponsors outside of Lesser, including Democratic Rep. Brian Ashe of Longmeadow and Republican Senator Ryan Fattman of Sutton.
“Businesses bear a heavy burden in their important role of protecting our public health and preventing the spread of COVID-19,” said Senate Minority Leader Bruce Tarr, a Republican from Gloucester. “I want to explore all the opportunities to help them survive.”
The Small Business Administration has published more than 118,000 PPP loans to small businesses in Massachusetts, for a total of $ 14.3 billion. PPP loans have become available under the CARES Act to help businesses struggling to stay open during the pandemic. Businesses can use it to cover salary expenses, health care benefits, rent, utilities, and other debt obligations.
Businesses can get their loans canceled if they have used at least 60% of the loan to cover salary expenses to keep their employees.