Photo courtesy of Minnesota History Center.
House Republicans on Thursday called for immediate action to change Minnesota’s tax code so that federally-guaranteed business loans to cover payroll during the pandemic won’t be taxed as income.
Minnesota businesses have received $9 billion from the recently-approved Paycheck Protection Program through April 16, according to data from the Small Business Administration. Congress created the $350 billion fund as part of its Coronavirus Aid, Relief and Economic Security (CARES) Act.
The loans are forgivable if employees are kept on payroll for eight weeks and if the bulk of the money is used for payroll; other allowed uses include rent, mortgage interest or utilities.
House Minority Leader Kurt Daudt, R-Crown, and state Rep. Greg Davids, R-Preston, said they are hoping for action on Tuesday, when the House is next set to meet.
“This could result in hundreds of millions in tax hikes on Minnesota businesses at a time when they are struggling for survival,” Daudt said during an online press conference. “That’s why today we are calling on immediate action to fix this unintended tax hike.”
Davids said the issue is time-sensitive and requires quick action to ensure businesses who received federally-backed loans to stay afloat are not later hit with a big tax bill from the state of Minnesota.
The loans are tax-exempt under the federal tax code.
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