in a hurry to get a loan? Hospitality businesses can use federal Paycheck Protection Program (P3P) loans to get out of the pandemic by paying for things like payroll, benefits, rent, and more.
However, what was supposed to be a lifeline for small businesses could now mean financial ruin.
Jason Vincent owns the Boat Club in Duluth and two other restaurants.
“We are struggling enough,” said Vincent. “Right now, 2021 is the year of surviving and hopefully digging holes, not trying to pay off the debt we were given to survive the pandemic.”
Vincent has received over $ 500,000 in PPP loans.
While loans like this would generally be taxed as income, Congress chose to exempt P3 loans from federal income tax.
Although many states have passed the exemption from Congress, at this point Minnesota is still planning to tax loans.
“We cannot afford to be taxed close to 10% on the aid given to us to keep our doors open,” said Vincent. “It just doesn’t make sense.”
Small business owners like Vincent could have to pay thousands in state taxes on money meant to help them recover.
Hospitality Minnesota, an advocacy group based in the Twin Cities, is working to pass a bill preventing this from happening.
“We hope he will be able to get through the process,” said Hospitality Minnesota government relations director Ben Wogsland. “Right now it has passed through the Senate to the Senate. It has a movement in the House. It has now been heard in the House, and we are cautiously optimistic that there is bipartisan interest in pushing forward. things.”
Vincent hopes lawmakers will take action.
“I’m really confident that lawmakers are going to do exactly what they said they are doing, and that is supporting their local restaurants and their small independent businesses,” Vincent said.
Vincent’s businesses could owe $ 60,000 in taxes if a change is not made.
“It is certainly a top priority for Hospitality Minnesota here in this legislative session,” Wogsland said.
Countless other small businesses in Minnesota face an even bigger bill.
The bill to remove the state tax on PPP loans would require congressional approval before being signed by Governor Tim Walz.