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A bi-partisan tax relief bill introduced in January 2021 by Senator Tom Bakk with four supporting senators, Carla Nelson, R-Rochester; current Senate Tax Committee Ranking member and former House Tax Committee Chair Ann Rest; former Senate Tax Committee Chair Senator Roger Chamberlain, R-Lino Lakes and Senator David Tomassoni, D-Chisholm has picked up support from the Cook County Chamber of Commerce.
The bill is described as an income and corporate franchise tax “federal conformity to the exclusion of paycheck loan forgiveness from gross income; business entities option to file C-option corporations; section 179 expensing conformity clarification; unemployment compensation deduction.”
In plain English, it is a bill to allow businesses who received Payroll Protection Program (PPP) loans through the Federal Government’s Small Business Administration to be excluded from paying state income or corporate franchise taxes on those loans.
The very long, detailed bill also gives some businesses the ability to file as C-corporations.
In a letter to the Office of Governor Tim Walz and Lt. Governor Peggy Flanagan, Chamber Director Jim Boyd wrote, “When the state’s revenue outlook shifted dramatically from deficit to surplus, the last excuse died for Governor Tim Walz and the Minnesota Legislature to delay exempting from state taxes the forgiven federal Paycheck Protection Program loans taken out by Minnesota businesses.”
The Cook County Chamber offered three key points of support for this legislation. In summary, it was noted that aid payments were made by federal authorities to help struggling businesses, and if the state taxed the forgiven loans, the state would claim almost half a billion dollars in federal COVID-19 relief intended for Minnesota businesses and workers. It was also noted that the loans were for workers, not employers and, in light with state’s newly announced revenue surplus, “A onetime surplus, which this is, most wisely is used to fund one-time costs—such as neutralizing the impact on state receipts of forgoing a tax on forgiven PPP loans,” Boyd wrote.
“We appreciate the support for this bill and encourage swift action for surety for our small business owners in Cook County and Minnesota,” added Boyd.
The letter from the chamber was sent to the governor on March 3.
Senator Bakk says it would defy common sense to make small businesses liable to pay taxes on the same support that kept them alive.
According to Senator Bakk, if this bill doesn’t pass, thousands of Minnesota companies will have to pay taxes on PPP loans meant to keep those very businesses alive.
The federal government offered forgiveness of these loans if a business spent at least 60 percent of the PPP money on payroll.
In a statement issued in January, Bakk, I-Cook, said, “In these especially challenging times, we need to rally behind our small businesses and their workers to give them the support they need to survive. I am excited to unite a bipartisan coalition of legislators who want to take action to support the lifeblood of our communities.”
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