Republicans propose tax cuts to businesses that received PPP loans
MADISON, Wis. (CBS 58) -- Help could be on the way for businesses who are facing unexpected costs after receiving PPP loans geared towards keeping businesses afloat during the pandemic.
The Legislature’s budget committee approved a plan to give $540 million in tax cuts over the next three years to PPP recipients. It now heads to the Assembly for a vote on Tuesday.
Businesses incurred costs after realizing they are required to pay thousands in state taxes for their PPP loans issued by the federal government. Many business owners believed the loan would be treated as a grant, but under Wisconsin law, it’s not tax-deductible, but is at the federal level.
“It was definitely a surprise,” said Mike Doble, owner of Explorium Brewpub.
PPP loans were a lifeline to Doble and several others across the state which helped the restaurants and bar industry pay rent and keep staff on the payroll. Doble was not aware after spending his PPP loan that it would eventually cost him about $20,000 in state income taxes.
“I didn’t save any of that (PPP) money,” he said. “I used it for what it was intended to be, which was to get people back to work.”
If lawmakers don’t approve the proposal by April 15, businesses will be left to foot the cost.
“Don’t tax us on money that was intended to bail us out of a very bad situation,” said Doble.
The IRS originally told businesses their loans would be forgiven, but later realized that wasn't how the law was written under the federal COVID-19 relief act. Members of Congress passed a proposal in the second relief package to fix the error, but some states -- like Wisconsin -- have to come up with a solution on their own.
“Roughly speaking, for every $100,000 in PPP loans that have been taken out, our members could see anywhere from $6,000-8,000 of increases on their taxes,” said Cory Fish, Wisconsin Manufacturers & Commerce general counsel and director of tax, transportation & legal affairs.
The proposal to give tax cuts to PPE recipients does have bipartisan support. Some Democrats oppose the measure because they believe tax relief should be broader and offered to other businesses hardest hit by the pandemic.
The governor echoed Democrats concerns.
"We should be helping all small businesses, regardless of whether they received assistance from the state or the federal government," said Gov. Evers in a statement. "But as has been the case all along, I will keep doing everything I can to help and support our small businesses and families as they recover and bounce back from this pandemic."