MADISON – Wisconsin Manufacturers & Commerce (WMC) – the combined state chamber, manufacturers’ association and safety council – joined a group of 30 business associations and advocacy groups vehemently opposing a nearly half-billion-dollar tax on small businesses that accepted forgivable Paycheck Protection Program (PPP) loans.
PPP funds were specifically used to keep employees on the payroll for businesses that government forced to shut down in the early days of the COVID-19 pandemic. When Congress passed the Coronavirus Aid, Relief and Economic Security (CARES) Act that included the PPP loans, the intent was for all employers to be able to get these funds tax-free.
Unfortunately, the Wisconsin Department of Revenue (DOR) has made the determination that any expenses funded through a PPP loan cannot be deductible – resulting in a surprise tax of $450 million.
“These forgivable PPP loans are the only reason many Wisconsin businesses survived COVID-19 this long,” said WMC General Counsel and Director of Tax, Transportation & Legal Affairs Cory Fish. “Suddenly hitting them with a surprise half-billion-dollar tax could spell the end for countless employers throughout our state.”
The coalition of business and advocacy groups urged the State Legislature to work with Gov. Tony Evers on a solution that will protect businesses from a surprise tax and ensure the intent of Congress is followed through with.
“Employers accepting PPP funding did so not only because it was a lifeline during desperate times, but also because they believed the money would not be taxed,” added Fish. “Gov. Evers and lawmakers should work together to fulfill the promise that these funds would be available tax-free to all recipients.”
Congress has already acted to ensure businesses do not have to pay federal taxes on PPP loans, but state lawmakers must do the same to ensure small businesses don’t face millions of dollars in new and unexpected taxes.