On April 1st, Governor Baker signed a bill into law that secures REALTOR® PPP tax benefits. The bill (H.90), which MAR advocated in support of, extends a state tax exemption to all loans forgiven under the Paycheck Protection Program.
Shortly after passage of the CARES Act in late March 2020, MAR identified a misalignment between state and federal tax law that would expose pass-through entities, such as sole proprietorships, partnerships, limited liability companies, and S-corporations, to state taxation on forgiven loans under the Paycheck Protection Program (PPP). In addition to creating an unfair tax structure, this was a significant problem for two reasons:
- The PPP is specifically designed to create forgivable loans and the CARES Act states that the forgiven amounts should not be subject to tax.
- Many Realtor® businesses in Massachusetts are set up as pass-through entities.
The passage of H.90 extends state tax exemption to the forgiven PPP loans of pass-through entities, granting them the same benefits as other corporate structures. MAR applauds the Legislature and Governor for taking necessary action on this issue and is proud to have successfully advocated on this important issue.