Companies in Illinois can take their pandemic loans issued without worrying about paying federal taxes, but it's not yet clear whether they will owe the state anything.
In Illinois, 225,409 Paycheck Protection Program loans worth approximately $ 22.85 billion have been approved, according to the Small Business Administration. After the IRS ruled that the loans made would be taxable like any other loan made, Congress passed legislation in December that made the change explicitly tax-free.
Whether states that also levy a tax on issued loans agree is another matter.
"The question now is whether states will make sure they are not taxed, or whether the appeal of 'free income' is too great for states to resist," said Morgan Scarboro, manager of tax policy and economics near Virginia. Government company Multistate.
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Illinois continuously complies with federal tax law. This means that state corporate and income taxes would not apply to a PPP loan made. However, lawmakers trying to fill the state's $ 4 billion budget gap could enact laws that depart from federal tax laws and require companies to pay taxes on their PPP loans as if they were is about income.
"Businesses and taxpayers in general really just need an answer to how the state is going to handle these things," Scarboro said.
Illinois lawmakers tried to break another federal tax rule that allowed corporate tax breaks during the pandemic, but the measure wasn't passed until the end of the previous session. Many companies have until March 15th to file their taxes or apply for an extension. The rest usually has until April 15th.
The tax would hit businesses trying to break free from pandemic-induced closings initiated by the same governors who would benefit from the additional tax revenue, said Mark Grant, president of the Illinois chapter of the National Federation for Independent Business.
"I know they are looking for revenue, but that is not the way to go," he said.
The NFIB released a poll on Jan. 21 stating that 91.5% of members believe Illinois tax laws should be brought into line with federal law to prevent the state from granting Paycheck Protection Program (PPP ) taxed.
In New Jersey the legislation is currently underway To move on a bill that would bring their tax laws in line with the federal amendment. This would not only allow the companies there to write off the loan that was given, but also free up loan-related costs.
Virginia The legislature is working on it.
Elsewhere, governors are rioting as they seek to tax the loans to make up for budget deficits. Wisconsin Governor Tony Evers is Exposed to criticism about wanting to tax the loans even though Wisconsin has an estimated budget surplus of $ 1 billion. Maine Mills Janet Mills backed away of her urge to tax the loans issued after facing backlash from the business community.
(Copyright WBGZ Radio / www.AltonDailyNews.com)
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