As we enter yet another tax season unlike any before, there are many questions — and concerns — about Minnesota tax law and how it compares to recent federal tax changes. Unaligned tax laws have been an ever‐expanding headache for many Minnesotans. One issue that highlights the significance of this problem is the tax treatment of Paycheck Protection Program (PPP) forgiven loans.
In 2020, more than 100,000 Minnesota businesses received a lifeline in the form of PPP loans. These loans helped businesses retain staff and cover certain expenses when COVID‐19 pandemic regulations reduced opportunities for commerce. If the funds are used correctly within the guidelines of the law, then the loans are forgiven and — according to recent federal legislation — not taxed. Now PPP loan recipients are facing a significant state tax bill. If Minnesota doesn’t align its tax law accordingly, our community’s businesses will be taxed on their forgiven PPP loans. Small‐business owners likely don’t have the additional resources to pay an additional tax on a loan that Congress never intended to tax.
As a CPA and adviser to many local individuals, I have seen how devastating an unexpected tax liability can be on those struggling to keep their businesses open. Time is of the essence; lawmakers in St. Paul need to understand the urgency of aligning Minnesota’s tax code and help small businesses survive.
We may not know what the future holds, but legislators and Gov. Tim Walz can alleviate some uncertainty by passing a tax bill that helps our local small businesses and their employees.
Amanda Dick, CPA