The State of Ohio has joined other states in excluding forgiven Paycheck Protection Program (PPP) Loans from taxation.

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.

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