California State Senate Republicans call on Governor Newsom to make COVID-19 relief business loans tax-exempt
March 1, 2021 – Republicans of the California State Senate support legislative efforts that would allow states and the federal government to provide tax-free relief from COVID-19 corporate responsibility and allow them to fully deduct expenses paid with canceled loans. Senate Bill 265 introduced by Senator Andreas Borgeas (R-Fresno) would apply both to future pandemic-related relief funds and retroactively to beneficiaries who have already received funds.
As tax season approaches, many businesses fear the state of California is trying to tax federal aid and generate additional revenue. This, according to Republicans in California, is fundamentally unfair and urges Gov. Newsom to include these provisions in the next early-action budget bill likely to be considered next week.
“Businesses and entities that received federal assistance during the pandemic were in desperate need of this assistance and should not be penalized by the state of California,” said Republican Senate Leader Scott Wilk (R-Santa Clarita). “The state should not balance its budget on the backs of companies that are entitled to financial assistance. Our businesses have done less well than those in other states due to the high cost of operating businesses here coupled with confusing governor-ordered closure and reopening guidelines. Every effort should be made to help – not hurt – those who have requested and received pandemic relief funds. “
“Businesses might be surprised to learn that the pandemic relief funds they have received can be considered taxable events,” said Senator Borgeas, the author of the bill. “Distressed businesses shouldn’t have to deny relief just because they can’t afford to be taxed by California.”
California has yet to fully comply with federal tax laws, which exempt COVID-19 relief funds as taxable events. This could leave many companies struggling with significant tax obligations. It is critical to the recovery of our business community that California passes legislation that will provide businesses with the relief they deserve.
Source: CA. Republicans in the Senate