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CC Regular Session 7.4. <br />Meeting Date: 02/08/2021 <br />Submitted For: Kurt Ulrich, Administrative Services <br />By: Kathy Schmitz, Administrative Services <br />Information <br />Title: <br />Adopt Resolution #21-046 Resolution Supporting Legislation Adopting Minnesota Tax Conformity for Payroll <br />Protection Plan (PPP) Loans <br />Purpose/Background: <br />Currently Minnesota doesn't conform to the federal treatment of forgiven PPP loans. Unless Minnesota conforms <br />the expenses will be deductible but forgiven loans will be considered taxable income and the intended benefit not <br />realized in Minnesota. <br />Minnesota businesses are struggling to retain employees and stay open as the impacts of the COVID19 pandemic <br />continue; and many Ramsey businesses will face an unexpected tax bill without action to pass an early tax <br />conformity bill. Our local representatives have suggested that City support of this legislation would be of value. <br />Congress provided an additional lifeline to businesses in December by authorizing a second round of Paycheck <br />Protection Program (PPP) loans and setting clear guidance about the federal tax treatment of forgiven loans and <br />deducting allowed expenses but without action by the Minnesota Legislature to pass a bill conforming to the federal <br />changes, forgiven PPP loans will be taxed as income on Minnesota tax returns. Additional language provides for <br />tax conformity for businesses that paid for allowed expenses with forgiven, untaxed PPP loans. <br />Companion Bills, SF 263 and HF 501, have been introduced in the Minnesota Senate and House, and this <br />legislation would provide for conformity on PPP loans and it would also allow S Corps to file taxes as a C Corp to <br />allow SALT taxes above $10,000 to be deducted on the federal returns of Minnesota businesses. Delays in passing <br />this legislation is problematic as a tax -filing deadlines are quickly approaching. <br />Observations/Alternatives: <br />The budget impact of the State is estimated at $000 million and is likely to be considered by the Legislature as part <br />of the broader tax and budget discussions. <br />Funding Source: <br />N/A <br />Recommendation: <br />It is recommended that the City Council adopt attached Resolution #21-046. <br />Action: <br />Motion to Adopt Resolution #21-046 SUPPORTING LEGISLATION ADOPTING MINNESOTA TAX <br />CONFORMITY FOR PAYROLL PROTECTION PLAN (PPP) LOANS <br />