Anoka Times

In the midst of the COVID-19 outbreak, there has been no shortage of financial aid programs, however, fears over the long-term ramifications of this financial aid are surfacing. 

According to StarTribune, small businesses owners are now fearing that they may have to pay taxes from the Paycheck Protection Program (PPP) — a fact that was previously unknown. 

House Minority Leader, Kurt Daudt, is asking that state lawmakers direct their attention to finding a way to provide relief from taxes incurred from the PPP. Democrats in the House are not so keen to address this issue, StarTribune reports. 

While the federal taxes on the PPP will be forgiven if certain requirements are met by the borrowers, Minnesota’s tax code will group forgiven debt in with taxable income, which could result in high fees for local business owners. 

"Minnesota businesses are fighting just to survive right now," Daudt said. "These loans are a lifeline meant to cover the basics — payroll for employees, rent and utilities. There's no reason forgiven loans should trigger a tax hike at a time when businesses can least afford it."

More than 46,000 Minnesota companies have been granted $9 billion in forgivable loans from the PPP. At the current corporate tax rate, that balance would result in $600 million in taxes, House Republicans say, but that number may increase as the program gets more funding from Congress. 

Mactech CEO, Joel Wittenbraker, said that he would appreciate some clarity on the issue of the PPP and the amount of tax it may incur. 

"We've had a lot of conversations about PPP with our accountants and other people, and I never heard a peep about this," Wittenbraker said. "Anytime you don't know what the rules are, you are concerned."

Daudt said that he is worried about small businesses having to set aside some of the money for taxes, rather than putting it back into the economy.