The Coronavirus Aid, Relief, and Economic Security (CARES) Act, passed by Congress, provides federal assistance to small businesses, including forgivable Paycheck Protection Program (PPP) loans. The amount of a PPP loan and any amount of the loan that is forgiven under the CARES Act is excluded from a taxpayer’s gross receipts for purposes of the Commercial Activity Tax (CAT).
The principal amount received by a person on account of any transaction, properly characterized as a loan to a person, is excluded from gross receipts under R.C. 5751.01(F)(2)(e). Additionally, forgiven debt is generally included in gross receipts for CAT .
However, uncodified section 36 of Am. Sub. H.B. 481 of the 133rd General Assembly excludes from gross receipts amounts of forgiven indebtedness excluded from a taxpayer’s gross income for federal income tax purposes pursuant to section 1106(i) of the CARES Act.