7.4.
CC Regular Session
- Meeting Date:
- 02/08/2021
- Submitted For:
- Kurt Ulrich
- By:
- Kathy Schmitz, Administrative Services
Information
Title:
Adopt Resolution #21-046 Resolution Supporting Legislation Adopting Minnesota Tax Conformity for Payroll Protection Plan (PPP) Loans
Purpose/Background:
Currently Minnesota doesn’t conform to the federal treatment of forgiven PPP loans. Unless Minnesota conforms the expenses will be deductible but forgiven loans will be considered taxable income and the intended benefit not realized in Minnesota.
Minnesota businesses are struggling to retain employees and stay open as the impacts of the COVID19 pandemic continue; and many Ramsey businesses will face an unexpected tax bill without action to pass an early tax conformity bill. Our local representatives have suggested that City support of this legislation would be of value.
Congress provided an additional lifeline to businesses in December by authorizing a second round of Paycheck Protection Program (PPP) loans and setting clear guidance about the federal tax treatment of forgiven loans and deducting allowed expenses but without action by the Minnesota Legislature to pass a bill conforming to the federal changes, forgiven PPP loans will be taxed as income on Minnesota tax returns. Additional language provides for tax conformity for businesses that paid for allowed expenses with forgiven, untaxed PPP loans.
Companion Bills, SF 263 and HF 501, have been introduced in the Minnesota Senate and House, and this legislation would provide for conformity on PPP loans and it would also allow S Corps to file taxes as a C Corp to allow SALT taxes above $10,000 to be deducted on the federal returns of Minnesota businesses. Delays in passing this legislation is problematic as a tax-filing deadlines are quickly approaching.
Observations/Alternatives:
The budget impact of the State is estimated at $000 million and is likely to be considered by the Legislature as part of the broader tax and budget discussions.
Funding Source:
N/A
Recommendation:
It is recommended that the City Council adopt attached Resolution #21-046.
Action:
Motion to Adopt Resolution #21-046 SUPPORTING LEGISLATION ADOPTING MINNESOTA TAX CONFORMITY FOR PAYROLL PROTECTION PLAN (PPP) LOANS
Attachments
Form Review
| Inbox | Reviewed By | Date |
|---|---|---|
| Kurt Ulrich | Kurt Ulrich | 02/04/2021 04:15 PM |
- Form Started By:
- Kathy Schmitz
- Started On:
- 02/04/2021 12:02 PM
- Final Approval Date:
- 02/04/2021