Texas Senate Bill SB372

Texas 2021 - 87th Regular

Caption

Relating to the forgiveness of a loan made under the Paycheck Protection Program for franchise tax purposes.

Impact

The implications of SB372 are particularly impactful for Texas businesses that have utilized PPP funds. By not counting forgiven loan amounts as revenue for franchise tax purposes, the bill aims to alleviate some of the financial burdens these businesses may face in the wake of the pandemic. This retroactive application to reports due on or after January 1, 2021, means that many businesses can re-evaluate their tax filings and potentially receive financial relief in the form of lower tax obligations.

Summary

Senate Bill 372 (SB372) amends the Texas Tax Code regarding the treatment of forgiven loans under the Paycheck Protection Program (PPP) for franchise tax purposes. Specifically, the bill states that any amounts of a loan forgiven under the PPP will not be included in the total revenue calculation for franchise tax filings. This change is significant for businesses that received such loans during the economic disruptions caused by the COVID-19 pandemic, as it effectively allows them to exclude forgiven loan amounts from taxable revenue calculations, potentially reducing their tax liabilities substantially.

Contention

While the bill predominantly enjoys support as a beneficial measure for businesses, there may be contention regarding the broader impacts of tax code adjustments based on pandemic-related federal aid programs. Critics might argue that such exemptions could lead to complexities in tax administration and a perception of inequity among businesses that did not receive federal assistance. Furthermore, stakeholders may express concerns about the long-term implications for state revenue and budgetary practices as pandemic-era financial supports transition to legislated policies.