Crain’s Detroit Business April 23, 2021 Nick Manes
Michigan small business owners who received federal Paycheck Protection Program loans will in most cases be free of any state tax obligation on those loans.
The Michigan Department of Treasury said in a memo this week that in conjunction with federal policy, the state’s taxpayers need not “include any specific loan documentation, including proof of forgiveness or proof of expenses, with the filing of the Michigan individual or corporate income tax return.”
The popular PPP was enacted in March 2020 as part of the sprawling federal CARES Act relief program designed to mitigate some of the economic damage caused by the COVID-19 pandemic. The PPP provides forgivable loans for small businesses to cover payroll and other costs of doing business.
Congress designed PPP loans to be tax-free, but an interpretation by the U.S. Department of Treasury meant further action was needed by lawmakers — and was taken in December, according to The Tax Foundation, a federal and state tax policy think tank.
Now states including Michigan and most others are moving toward alignment with federal policy.
As of April 18, a total of 119,088 PPP loans had been approved in Michigan, totaling almost $7.3 billion in loan volume, according to data from the U.S. Small Business Administration, which administers the program.
