The Paycheck Protection Program (PPP) has created a bit of confusion on what it means for small business owners and the people who rely on them for employment once tax season rolls around. I have been asked by a number of people in Staten Island and Brooklyn what to do.
Many of these people were worried that funds secured through PPP loans would be taxed as income. While this was originally indefinite, the federal government has since cleared this up in the federal coronavirus relief legislation that passed in December. The legislation states that businesses who have met the criteria for forgiveness will in fact not need to worry about the loans being taxed as income and can deduct business expenses paid for with forgiven PPP loan money.
While cleared up on the federal level, it remained unclear for many businesses in New York if their same concerns would be alleviated on the state level. I am glad to be able to tell my friends and neighbors in the business community that they do not need to worry. New York State’s Department of Taxation and Finance will follow the direction taken by the federal government and refrain from taxing PPP loan proceeds and allow for businesses to deduct expenses from their state taxes.
The past year has been strenuous and difficult for everyone, especially our small business owners. The Paycheck Protection Program (PPP) was an important tool to try and save as many of our mom-and-pop shops as possible in this time of lockdowns and depression. We mustn’t punish further the people who were able to take advantage of this program by imposing even more tax burdens on them.
This legislative session it is crucial that we not only support the programs like PPP that are already in place, but that we provide even more assistance and incentive for businesses to reopen their doors. Small businesses are the backbone of our communities and we owe it to them to do everything in our power to get them back to doing what they do best, working hard and acting as the pillars of our neighborhoods’ personality.