Protecting Recipients of the Paycheck Protection Program
On top of all the adversity, hardship, and changes COVID - 19 imposed on the state’s employers over the last year, the Wisconsin Department of Revenue (DOR) recently determined that over 108,000 businesses who utilized the federal Paycheck Protection Program (PPP) loans would be required to pay millions of dollars in taxes on those loans.
With Congress’ approval of the Consolidated Appropriations Act of 2021, recipients of both cycles of PPP loans were federally able to omit the loan from their taxable incomes as well as deduct qualified expenses. However, according to the DOR, Wisconsin wouldn’t be able to forgive counting the forgiven loans as taxable income due to our adherence of the 2017 Internal Revenue Code (IRC).
Assembly Bill 2 as amended mirrors changes made at the federal level, allowing businesses to exclude the loan amount from their taxable incomes and permitting businesses to deduct qualified expenses. The change aligns Wisconsin with federal law and simplifies the tax code, ensuring businesses receiving PPP loans aren’t penalized for accepting aid.
Altogether, over $11 billion was distributed to Wisconsin businesses in keeping over 1,365,000 of our fellow Wisconsin citizens employed during the pandemic. Legislative fiscal analysts estimate the deductions will result in a tax savings to businesses of $540 million between now and 2023.
Congress intended for PPP loans to be tax free and for expenses paid for with the loans to be deductible. My vote of YES on Assembly Bill 2 ensures the businesses that are the backbone of our local economies continue providing jobs throughout the state. The Senate concurred and now the bill is awaiting either the governor’s signature or veto.