(The Center Square) – Ohio lawmakers took the first step on Tuesday to ensure companies that have received aid from federal COVID-19 funding aren’t prevented from paying state taxes on loans, that are supposed to keep people working.
The House and Senate committees held hearings on bills that complied with Ohio Taxes Act with federal law that required loans for the paycheck protection program and allowed companies to deduct payrolls and other expenses paid on the loans.
According to the National Federation of Independent Business, 77% of Ohio members took advantage of the first Congressional PPP loan, and 55% reported a 20% or more loss in revenue over the past year.
Chris Ferruso, the NFIB legislative director in Ohio, said the typical Ohio member of the organization had 20 or fewer employees and less than $ 2 million in annual revenue.
“Our members need reassurance that Ohio law will not treat these loans differently when preparing their tax returns,” said Ferruso, who testified in support of Senate Act 18. “Keeping resources in our small businesses is critical to their continued viability.”
Ohio Department of Taxation Legislative Director Tim Lynch testified in support of House bill 48 and said compliance with federal tax laws only makes it easier for filers.
“The first line of the Ohio Income Tax Form requires taxpayers to enter their gross adjusted income from Federal Form 1040. The same starting definition of income as the federal government makes state income tax creation and management much easier for taxpayers and tax preparers, state tax officials and school districts that levy income taxes, ”Lynch said.
Policy Matters Ohio declined to allow the deductions but claimed it would benefit the rich.
“This is a classic double dip for wealthy Ohioans,” said Zach Schiller of Policy Matters Ohio before the Senate Ways and Means Committee. “The Internal Revenue Service specifically prohibited the deductibility of such expenses on the first round of PPP loans, citing applicable law and precedents. While hundreds of thousands of Ohioans pay taxes on unemployment benefits they received last year, business owners will avoid paying taxes on the loans they used to pay workers’ wages, and they will receive tax deductions. “
The reactions of state lawmakers across the country have been mixed.
Virginia lawmakers are debating limits on spending deductions. Minnesota lawmakers have not made a decision about compliance with the federal tax law, while Iowa corporations do not pay state taxes on the loans.