PA Act 1 of 2021: PA COVID Relief Including Forgiven PPP Loans Not Taxable

 In COVID-19

February 8, 2021 |

On Friday, February 5, 2021, Governor Wolf signed Senate Bill 109, now known as Act 1 of 2021, into law. This law contains additional COVID-19 relief funding. The biggest win for many business owners is that Payroll Protection Program (PPP) loan forgiveness by the Small Business Administration (SBA) is no longer taxable for PA income tax purposes. The PA law is now in alignment with federal taxation of PPP loan forgiveness.

The bill also helps the state’s hospitality industry by establishing a county block grant program where recipients in the hospitality industry can receive grants up to $50,000 to help offset revenue loss and to pay eligible operating expenses not covered by other federal and state relief programs as a result of COVID-19. Each county receiving a block grant is responsible for creating a grant application, accepting applications through June 15, and making all funding decisions by July 15, 2021. The hospitality grants must be disbursed to approved recipients by July 31. Priority will be given to eligible applicants that (1) have not received other state or federal loans or grants under the CARES Act or the 2021 Consolidated Appropriations Act, (2) were subject to closure by the disaster emergency issued by Governor Wolf on March 6, or (3) can demonstrate a reduction in gross receipts of 50% or more for the period 3/31/20 – 12/31/20 compared to the same time period in 2019.

Finally the law provides additional education funding and will also support landlords and tenants. The assistance provided to landlords is to support those who are housing the unemployed or those who had their annual household income decrease by 30% or more after March 1, 2020 as a result of the COVID-19 pandemic. Tenants will be supported through a rental and utility assistance grant program that will help to pay for current and past due rent and utility expenses.

As always, please reach out to your advisor at Simon Lever with questions or to assist as needed.

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