Massachusetts companies that had obtained federal loans during the COVID-19 pandemic to help weather the recession were able to extend those loans only to face a heavy tax burden on the funds in April.
Senator Eric Lesser said he is proposing to amend the Massachusetts Income Tax Act so that small businesses whose loans go to the Paycheck Protection Program do not receive a higher tax burden.
“This legislation will ensure that struggling small business owners who have suffered unimaginable difficulties over the past year will not be taxed by the state on their PPP loan lending amounts,” the Longmeadow Democrat said in a statement Friday.
Lesser, who co-chaired the Joint Economic Development and Emerging Technologies Committee last meeting, said the proposed changes would reflect federal tax law on loan amounts granted.
The SD.172 bill has seven co-sponsors alongside Lesser, including Democratic MP Brian Ashe of Longmeadow and Republican Senator Ryan Fattman of Sutton.
“Businesses carry a heavy burden in their vital role in protecting our public health and preventing the spread of COVID-19,” said Bruce Tarr, a Republican from Gloucester. “I want to explore every opportunity to help them survive.”
The Small Business Administration has made more than 118,000 PPP loans to small businesses in Massachusetts that total $ 14.3 billion. The PPP loans were made available under the CARES Act to help businesses struggling to stay open during the pandemic. Businesses can use it to cover wages and salaries, healthcare benefits, rent, utilities, and other debt obligations.
Businesses can extend their loans if they have used at least 60% of the loan to cover labor costs to keep their employees.