California business owners can expect to receive financial support after lawmakers revived a multi-billion dollar tax break on Monday that would aid some establishments after Biden’s administration reassured the legislation will not hamper the federal coronavirus support.
United States officials provided nearly $97 billion for loans to aid California companies during the coronavirus pandemic. The old law will not require some business owners to pay back their loans. Currently, Congress allows business owners to deduct some of their expenses associated with those loans from their federal tax fees.
Business Tax Break
California lawmakers delayed pushing the revitalization of the law in fear of losing their federal coronavirus aid. However, the U.S. Treasury Department said the law could be passed without costing them the coronavirus relief aid.
On Monday, the Senate unanimously voted 37-0 in favor of the legislation. It would continue on to the state Assembly. Assembly Speaker Anthony Rendon called the move “one of the biggest proposed tax cuts in California history.” The California Department of Finance said it would cost the state between $4.4 billion and $6.8 billion over the next six years.
The Assembly planned to vet the proposal in committee to take it up as soon as possible. “The large number of coauthors on this bill indicates its wide support in the legislature,” Rendon said.
The legislation provides financial relief for some tax preparers. “That was our big issue for the past three to four months, a lack of clarity as to who could qualify for forgiveness. It’s going to be a scramble to get everything prepared,” Ontario East Accountant John P. Schultz said.
However, the bill will not provide loans to all businesses in the region. Eligible businesses include those that are not publicly traded and those that reported a loss of at least 25% of gross receipts during at least one quarter in 2020.
“While it does exclude some businesses, it’s a very small number,” state Senator Nancy Skinner said. Republican State Senator Andres Borgeas said he plans to author another bill later this year to support businesses that were not eligible to receive loans under this proposal.
“It’s fundamentally unfair for California to tax federal emergency relief funds. This is a big win for businesses in California,” Borgeas said, the North Bay Journal reported.