Minnesota lawmakers are pushing to make Paycheck Protection Program loans exempt from state taxes.
On Monday, Rep. Greg Davids, R-Preston, Republican lead on the House Taxes Committee, sent a letter to committee chair Chair Rep. Paul Marquart, DFL-Dilworth, asking for action on a bill that would exempt PPP loans from state taxes.
Davids cited a $1.6 billion surplus projected on Friday for the state’s two-year budget cycle, marking a turnaround from a projected $1.3 billion deficit in November.
“In light of the state’s $1.6 billion budget surplus, we have the resources needed to address this issue quickly. Further delays will force businesses to file extensions as they wait for action by the legislature,” the letter reads.
In late 2020, Congress passed the Coronavirus Response and Relief Supplemental Appropriations Act of 2021, which made PPP loans meeting the specified criteria exempt from federal taxes.
Still, a handful of states, including Minnesota, have yet to exempt the loans from state taxes.
Gov. Tim Walz said he was open to exempting PPP loans from state taxes at a media availability last week, before the state’s budget surplus was announced. Walz said he would know more after the budget forecast.
“I’m more than willing to have that conversion,” Walz said. “It’s not intended to punish those very businesses it helped.”
As of June, just over 98,000 Minnesota businesses had received more than $11.2 billion in PPP loans, according to the U.S. Small Business Administration.
Last month, the Biden Administration announced that small businesses and nonprofits with fewer than 20 employees and sole proprietors can apply for a second round of PPP loans through March 9, after complaints that too much of the first round of loans went to large corporations.
PPP loan applications will open up March 10 through March 31 for all other eligible entities.