MADISON, February 10, 2021 – Today, the National Federation of Independent Business (NFIB), the state’s leading advocate on behalf of small business, commended members of the Joint Committee on Finance for rejecting a plan by the Department of Revenue to tax forgivable loan proceeds under the Paycheck Protection Program, something that the federal government has already done.
“The Department of Revenue guidance document got it wrong,” said Bill G. Smith, NFIB State Director in Wisconsin, “and now the Legislature has the responsibility to get it right, and we are pleased the Joint Committee on Finance has voted to move this important small business issue forward.”
According to the NFIB Research Center, almost two-thirds of 2020 PPP borrowers have applied for loan forgiveness, and another 18 percent are ready to apply as soon as their lenders are ready to accept applications.
“Taxing these payments when they were provided to keep businesses afloat and employees employed makes no sense to me,” said Mike Temp, La Crosse NFIB Member and CPA at Tostrud and Temp, “other than a money grab at the expense of small businesses trying to survive the pandemic.
In a statement from NFIB, Smith reminded legislators that Congress never intended for these forgiven expenses to be taxable, the CARES Act clearly states that forgiven expenses shall be excluded from gross income.
“As an employer in Wisconsin for over 50 years,” said Bobby Donahue, Owner of Donahue Super Sports in Wisconsin Rapids, “it is expected that when the federal government made their ruling on the tax situation, that Wisconsin would also honor that ruling.”
“While we are disappointed with the Department of Revenue putting forward a plan that would assess struggling small businesses with millions of dollars in additional taxes, we commend members of the Joint Finance Committee for rejecting a backhanded tax increase which would add millions of dollars to the tax burden of thousands of struggling small business owners,” said Smith.
NFIB is urging the Legislature and Governor to support conformity with federal tax law that exempts PPP loan proceeds from taxation.