Today the Senate approved Assembly Bill 80, an emergency early action budget item, which provides eligible recipient businesses of Paycheck Protection Program (PPP) loan assistance the ability to fully deduct expenses on their taxes.
In January, Senator Andreas Borgeas (R-Fresno) introduced Senate Bill 265, which would give full deductibility to businesses that received PPP loans. With the extended tax deadline approaching and the constraints of the legislative process, Senator Borgeas and Senate Republicans pushed for months to include SB 265 into an emergency budget bill. The inclusion of key provisions from SB 265 in AB 80 signals a step in the right direction toward economy recovery.
“Businesses that have received assistance during the pandemic should not be penalized by the state,” said Senator Borgeas. “I appreciate legislative leaders including key provisions of SB 265 into the emergency budget bill to help struggling businesses. However, much work remains to include businesses left out of AB 80, and California needs full tax conformity to allow for full deductibility for all businesses. Those who applied for and received pandemic relief funds need every dollar to stay afloat.”
Businesses have long been concerned that the state of California was attempting to tax federal assistance and generate extra revenue. Assembly Bill 80 will allow non-publicly traded businesses that had at least a 25 percent loss in revenue to fully deduct forgivable PPP loan expenses in order to conform to federal tax guidelines.