Legislature votes to waive state taxes on PPP loans as local business, bank discuss impact
STEVENS POINT, Wis. (WSAW) - The state legislature approved a plan Tuesday to waive state taxes on Paycheck Protection Program loans for businesses.
The loans are exempt from federal taxes, and businesses across Wisconsin, notably the restaurant industry, had lobbied to avoid state taxes.
The bill passed in the Assembly by a vote of 87-3 and in the Senate by a vote of 27-5.
Opponents of the plan say it will create a tax benefit in favor of large PPP recipients. But one small business says it will make a big difference.
The manager of Ruby Coffee Roasters in Stevens Point says not having to pay those taxes will mean more money to stay afloat and more reassurance that he’ll be able to keep his employees.
Cafe Manager Kellen Ferkey says his employees at Ruby mean a lot to him. The PPP loan Ruby’s got was a lifeline for them.
“What PPP meant for us was that we could retain all of our staff, without having to send people off, or terminate employees, and that was huge for us,” Ferkey said.
“Retaining all of our staff was paramount to us. Keeping people on the same pay scale, and keeping them fully engaged in their day-to-day lives, and providing stability for our employees was huge. It was so much different than thinking about ‘Who are you going to cut? Who doesn’t make the cut?’” he said.
The bill will allow businesses to avoid paying the state any of the relief money.
“To not have to pay that, or have it forgiven, would be amazing to us, and change the whole year of 2020 and what it looked like,” he said.
It means not paying taxes on anything Ruby spent the money on.
“The federal government changed their ruling on how the expenses are taxed, so taxation on how you use those funds, and they allow those to not be eligible for taxation. That’s what the state is looking to mirror,” explained Meredith Otte, Vice President of Private and Commercial Banking at People’s State Bank.
Otte has been helping businesses with their PPP loans. She says every penny has helped keep them open.
“Small businesses that have been hard hit look to the PPP as a lifeline to sustain operations while the economy recovers from the COVID impact, so many of them are using every single dollar to pay workers, make necessary accommodations to remain COVID-compliant,” Otte said.
She added that businesses should consult with a tax professional when it comes to figuring out what they need to pay. But not having to pay those taxes might be the difference that keeps a neighborhood favorite open.
“Making those businesses carve out a portion of those funds for taxes could lead to more small business closures,” she said. “The small businesses that we support at the bank are the backbone of our community and what make central Wisconsin such a special place.”
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