NC House passes bill that would cut taxes for PPP loan recipients

News

RALEIGH, N.C. (WNCN) — The North Carolina House of Representatives voted almost unanimously Thursday in favor of a bill that would cut taxes for businesses that received federal loans through the Paycheck Protection Program.

The program was one of various provisions included in the CARES Act last year and is meant to keep employees on the payroll as businesses have struggled during the pandemic for the last year.

Read House Bill 334

The bill would put North Carolina in line with 47 other states and the federal government, giving businesses a tax deduction for expenses they paid using PPP loans that have been forgiven.

Typically, loans are considered taxable income and not deductible, lawmakers explained.

Jason Smith, who owns Cantina 18 in Raleigh and Harvest 18 in Durham, said even with the help of the PPP loans, he will not be able to reopen his third restaurant in Morrisville.

He joined other small business owners Thursday in urging state leaders to pass HB 334.

“If this doesn’t pass, the setback is going to be monumental. It’ll really take a lot of wind out of our sails,” he said. “It’ll be another three or four months that we’re not getting out of debt due to COVID.”

The House approved the bill by a vote of 111-2.

A final vote is scheduled for Tuesday, at which point the bill would go to the Senate.

Republican Senate leader Phil Berger said it wasn’t clear if the Senate would act on it, but said if that did happen it would not be soon. He said he still wanted to have discussions with his party’s members.

An analysis by the General Assembly’s non-partisan fiscal research division notes if the House bill passes, the impact to the state is about $400 million.

According to the Small Business Administration, about 202,000 PPP loans have been approved in North Carolina.

During a press conference before Thursday’s vote on the bill, House Speaker Tim Moore (R) noted he himself received PPP loans last year and this year for his law office in King’s Mountain and asked other legislators if they had also received loans for their businesses.

Several raised their hands.

North Carolina has a part-time legislature, which means many lawmakers also have full-time jobs.

Moore’s 2020 PPP loan amount was $12,650, while the 2021 amount was $12,805, according to data from the Small Business Administration.

“It’s a public record that I took a PPP loan. It’s a public record of everybody who took a PPP loan,” he said.

In response to questions about whether there’s a conflict of interest, Moore said he requested an analysis of whether there’s an ethical issue pursuing the legislation.

His office shared with CBS 17 an email from Erika Churchill, a staff attorney with the General Assembly’s Legislative Analysis Divison.

“If the legislation altering the North Carolina treatment of the PPP loans applies equally (to) all these recipients, the general class exception would seem to apply, and allow participation in the legislative action provided your independence of judgment is not impaired. This means that you should always be assessing your independence of judgement in a matter in which you, or someone with which you are associated, have a financial interest. And, at all times, you should continue to assess other factors, like gifts or campaign contributions, to determine if any inappropriate influence in the discharge of your official duties has occurred, or is expected by the giver/contributor,” wrote Churchill.

Moore said if the bill passes, it would mean he would receive about $600 back from what he already paid in taxes.

He said the cost of amending his return would not be worth it.

“It’s no different than voting on a child tax credit if you have children. It’s no different than voting on the gas tax if you buy gas. It’s no different than voting on the income tax if you pay income,” he said.

Doug Warf, president of O2 Fitness, said the bill would have a substantial impact on businesses like his that have faced ongoing challenges since reopening. Gyms were not allowed to open until early September last year.

“As cases rose over the winter, it flattened and decreased. So, we were open and operating but still losing large chunks of money,” he said. “When you’re in a business that’s already trying to rebuild, and you’re not back to break even, to have an additional burden come in would be significant.”

Copyright 2021 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

Must-See Stories

More Must-See Stories
North Carolina Coronavirus Hotline: 1-866-462-3821

MOST POPULAR

Follow FOX8 on Twitter