Hawaii House Bill HB870

Hawaii 2022 Regular Session

• Introduced: 1/27/21
• Refer: 1/29/21

Caption

Relating To Conformity With Federal Law.

Impact

If implemented, this bill will have a direct impact on the tax liabilities of businesses in Hawaii that utilized the PPP. By confirming that forgiven loans are not considered taxable income, the bill promotes financial relief for affected businesses, thus supporting economic recovery in the wake of the pandemic. Additionally, the bill prevents potential taxation on amounts that were intended to help sustain businesses during a time of crisis, ensuring that the financial support aligns with the intent behind the federal legislation.

Summary

House Bill 870 aims to align Hawaii's income tax laws with federal regulations regarding the treatment of funds received under the Paycheck Protection Program (PPP). The PPP, established under the Small Business Act, provided financial assistance to small businesses during the COVID-19 pandemic. This bill specifically addresses the tax implications of loan forgiveness for amounts received by eligible recipients, ensuring that forgiven debts are not counted as gross income under state law. By enacting this conformity, the state aims to prevent any discrepancies between federal and state tax treatments which could burden businesses navigating tax obligations.

Contention

Although the bill is likely to support many businesses, it may also raise questions concerning state revenue. Opponents might argue that this tax exemption could result in a reduction of state income, limiting the funds available for public services. Another potential point of contention is the broader issue of equitable treatment across all businesses, as those who did not receive PPP loans or similar federal assistance may feel disadvantaged compared to those who did benefit from such programs. These discussions highlight the ongoing debate around balancing financial support measures and state revenue expectations.