The drastic impacts on businesses from COVID-19 are well known. Every day another business closes its doors. While federal CARES dollars helped some businesses weather the storm, Congress recognized that this emergency funding should not be taxable — and made sure that it would not be at the federal level. But an unexpected problem arose because of Minnesota tax law: Forgivable PPP loans are taxable at the state level.
The Minnesota Legislature has an opportunity to come together and immediately help businesses by passing federal tax conformity for these loans. This legislation should be passed early and as a stand-alone bill. Gov. Tim Walz should sign it as soon as possible.
Negotiating tactics have normalized the practice of finalizing agreements in the last hours of the session, but this is a case where time is of the essence; agreement already exists. We urge legislators to avoid using the small-business community as a bargaining chip during budget negotiations or rolling this into an end-of-session omnibus bill. Take this bill out of the pile and pass this reform fast.
Like many of our colleagues in the advocacy community, we have other things we would like to see passed this session too. We know that it is tempting to have something that is popular on both sides of the aisle as part of the package, and even more tempting to tack on other related changes. But we also understand that this singular issue is an easy fix and should remain that way.
Most small-business owners do not "hang their shingle," so to speak, to become accounting professionals. For many employers, red tape and paperwork is the stressful downside of entrepreneurship — and that was before a global pandemic and economic downturn. Now there is paperwork to first apply for emergency funding and then to possibly have that funding forgiven. You can easily imagine the mounting stress, fear and frustration. Please do not make their jobs harder by adding more anxiety about paying a tax bill on an emergency loan while still trying to make payroll, afford rent, keep the utilities on, etc. This fix would be one step in allowing them to focus on serving their customers and supporting their communities.
These businesses and their employees are our neighbors and friends. They need help! Passing this bill early and clean is how the Legislature can help. There is agreement, now we just need the leadership to get it done. A timely, bipartisan solution to this issue will show what we already know: that our elected officials — in the only divided legislature in the country — can put aside political differences to enact policies to help us all move forward.
Shannon Watson is vice president of public affairs at the St. Paul Area Chamber and a former staff member in the Minnesota Legislature. John Perlich is the public affairs manager at the St. Paul Area Chamber and a former staff member in the Wisconsin Legislature.