Hi folks,
believe me this is not something we wanted to write and inform people of but low and behold here we are. Massachusetts Deputy Director of Revenue announced that according to rule 20-9 they will be taxing forgiven PPP monies. This applies to anyone reporting business income on your personal tax return, such as folks with business K1 forms and schedule C filers.
C Corporations fall outside of rules allowing them to do this, so if you are taxed as a c corporation your forgiven PPP loan is not taxed by Mass.
For everyone else that falls into having a K1 or schedule C you will be taxed 5% Mass income tax on any PPP forgiveness.
A local Senator has filed a bill to fight Mass DOR’s ruling on this requesting treatment matching the fed, whereas it’s not taxed at all. Until the time if/when MA DOR gets overturned, we’d suggest not filing your personal tax return if you have a K1 or schedule C and had any PPP loans forgiven in 2020. File your business return for 2020 timely, as this has no impact on them.
We’ll keep our eyes on this and update you with any changes.
