MADISON – Gov. Tony Evers signed Assembly Bill 2 (AB 2) into law on Thursday, which will protect thousands of Wisconsin small businesses from facing hundreds of millions of dollars in unexpected taxes on loans received through the federal Paycheck Protection Program (PPP).
The bill became necessary when the state’s Department of Revenue (DOR) announced in January that expenses paid for with revenue from PPP loans would not be deductible for tax purposes – resulting in a surprise tax in excess of $400 million. Congressional intent was clear that these forgivable loans were meant to be tax free.
Wisconsin Manufacturers & Commerce (WMC) – the combined state chamber and manufacturers’ association – immediately called on lawmakers to uphold the promise made in the early months of the COVID-19 pandemic. Fortunately, Sen. Roger Roth, Sen. Howard Marklein, Rep. David Armstrong and Rep. Robert Wittke paved the way in the legislature.
“WMC heard from countless members of the business community about the devastating impact these surprise tax bills would have on their companies,” said WMC President & CEO Kurt Bauer. “This legislation is critical for thousands of employers who are still recovering from the worst economic downturn in a generation.”
WMC led a coalition of nearly 50 business associations and other advocacy groups to encourage bipartisan support of the bill. AB 2 was approved earlier this week by a vote of 87-3 in the Assembly and 27-5 in the Senate.
“WMC and our members thank Gov. Evers and the legislature for coming together to protect thousands of small businesses from costly and unexpected tax bills,” added Bauer. “As we continue to recover from COVID-19, it is critical that lawmakers work in a bipartisan fashion to promote economic growth and improve our state’s business climate.”
With Gov. Evers’ signature, AB 2 became 2021 Act 1.