COVID-19 Small Business Tax Relief Legislation Introduced in PA Senate

Pennsylvania Senators Camera Bartolotta and Judy Ward recently introduced legislation to provide additional economic relief through state tax laws to small businesses that have been impacted by the COVID-19 pandemic.

The first area of change allows small business taxpayers to take a net loss against other sources of income by allowing entities that had to sell off personal resources in order to support the business to continue to report losses.

The second change would allow small business taxpayers that are not corporations to carry forward net operating losses (NOLs) for up to 20 years. Under current state tax law, carryforwards of NOLs are disallowed for individual tax payers. The proposed legislation would align the corporate net income tax NOL carryforward periods with PA individual income tax laws.

Lastly, the proposed legislation would allow small business taxpayers to carry back NOLs as a form of relief. The purpose of the provision is to facilitate getting cash into the hands of small businesses faster, without the creation of a new grant or loan program. This section of the proposed legislation closely mirrors the NOL carryforward provisions of the federal CARES Act enacted in March.

The State and Local Tax department at Schneider Downs will continue to provide updates on the proposed legislation.

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