One of the key elements of the Paycheck Protection Program for small business is the debt could be forgiven. The PPP is a $953 billion loan program established by the federal government last year to help some businesses continue paying their workers during the coronavirus pandemic.
In December, Congress decided not to tax PPP forgiven loan debt. However, in Massachusetts, the amount forgiven in a PPP loan is still being taxed.
Why this is devastating:
The very money that was provided to help small businesses is actually hitting their pocket while we are still in a pandemic. This time of the year is typically slower for many local businesses (restaurants, hair salons, spas, etc.); with COCIF-19 restrictions added on top of that slowdown, many small businesses are struggling just to survive.
The Massachusetts Department of Revenue sweeps in on April 15 and demands its tax payment. This might be the final straw for some businesses here on the South Shore, causing them to close their doors forever. Every business that permanently closes affects not just the owners but also their employees (and their families), the supply companies they purchase from, and all the companies/people who use their services.
I do understand that Massachusetts needs the revenue. These small businesses would not have earned this money, so the tax would not have to be paid. In addition, it’s very possible that, without the PPP loan, some of these businesses would have laid off their employees and/or closed their doors.
Bill No. SD 127, An Act Providing Financial Relief to Small Businesses During The COVID-19 Pandemic, has been introduced in the state Senate to stop the forgiven PPP loan as being taxed in Massachusetts.
Help spread the word: Small businesses are vital to our communities. Contact Sen. Patrick O’Connor to get this passed in the Senate and Rep. Joan Meschino to get something in the House.
Certified management accountant