Multistate: Certain States Revise Treatment of PPP Loans

Until recently, under Vermont law for the 2021 tax year, forgiven PPP loans were includable in income and expenses paid with such amounts were deductible. Recently adopted, House Bill 436 changes the treatment and confirms that for the 2021 tax year, forgiven loans are not taxable in Vermont, and ordinary deductible business expenses paid using forgiven PPP loans are also deductible.  In New Hampshire, Senate Bill 3 (signed June 10, 2021) amends the Business Profits Tax (BPT) law to exclude income from forgiven PPP loans. As a result, the New Hampshire tax treatment of forgiven PPP loans will mirror the federal treatment. The State issued a Technical Information Release dated June 21, 2021 cautioning that the 2020 BPT forms have not been modified to reflect the recently-enacted legislation, meaning taxpayers may not need to make all of the reconciling adjustments reflected on the Schedule IV. Specifically, taxpayers reporting forgiven PPP loans for taxable periods ending on or after March 3, 2020 are generally not required to add back to their BPT return PPP amounts excluded from their federal return (Schedule IV, Part A, Line 3). Additionally, taxpayers are generally not required to adjust the deduction for expenses paid for with forgiven PPP loan funds (Schedule IV, Part B, Line 3). Please stay tuned to TWIST for additional PPP updates.