(The Center Square) – A Portland group representing certified public accountants has sent a letter to Maine Gov. Janet Mills about the possibility of business owners having to pay state tax on Paycheck Protection Program (PPP) loans.
Without a change in Maine law, businesses will owe the Maine income tax rate – up to 7 percent – on the forgivable loans, the Portland Press Herald reported.
Under the provisions of the CARES (Coronavirus Aid, Relief, and Economic Security) Act, which created the PPP, the loans are not taxed at the federal level.
“Maine does not conform to this federal law,” Trish Brigham, executive director of the Maine Society of Certified Public Accountants (MECPA), told the Herald. “Even if the loan is forgiven at the federal level, you will still have to pay Maine state income taxes.”
As many as 27,000 Maine employers that received PPP loans could be impacted.
The MECPA sent a letter to Gov. Mills in May, the Herald reported.
“Failure to conform will impose Maine income tax on Maine small businesses who are recipients of a forgiven PPP loan – something which will likely come as a great surprise to many Maine businesses and would directly undermine the intent of the PPP in helping our small businesses survive the crisis,” the letter said.
The Legislature’s Taxation Committee is scheduled to meet to consider a number of issues, which would likely include a tax conformity measure.
Mike Santo, who is a senior manager at the Augusta branch of the national accounting firm, Wipfli LLP, told the Herald that if legislators begin work on a tax conformity bill in January, when the regular session is scheduled to start, it may not provide adequate time for necessary technical adjustments prior to the April 15 tax deadline.