Texas Legislation Provides Relief To Businesses Receiving PPP Loan Forgiveness

In response to the COVID-19 pandemic, the U.S. Congress enacted legislation providing economic relief to businesses through the paycheck protection program (PPP), which allowed businesses to secure forgivable loans in order to continue paying employees while operations were impacted due to the pandemic. While PPP loans may be forgiven under the program, the business receiving the PPP loans prior to the passing of Texas House Bill 1195 (HB 1195), would have been subject to the franchise tax on the amount of PPP money received as part of its total revenue.

Yesterday, Governor Abbott signed HB 1195 into law. The legislation was authored by Representative Charlie Geren and Senator Kelly Hancock ensuring businesses that sought federal aid to stay afloat during the pandemic and continued to pay their employees are not subjected to a tax penalty for that effort by providing for the exclusion of qualifying PPP loans from the calculation of total revenue for franchise tax purposes.

The bill also authorizes a taxable entity to include in the determination of cost of goods sold or in the determination of compensation when calculating its gross margin any allowable expense paid using that amount of money.

These provisions apply only to a franchise tax report originally due on or after January 1, 2021.

For more information on how this impacts your business, please contact an HM&M advisor.

 

Contact Us

 

For more information check out HM&M’s COVID-19 Resources page.

HM&M COVID-19 Resources

Latest Blog

The Secure 2.0 Act: Key Changes for Workplace Retirement Plans

On December 29th, 2022, President Biden signed the SECURE Act 2.0 into law, as part of the Consolidated ...

65-Day Election Deadline Approaches for Complex Trust and Estates

A complex trust or estate may make an election under Internal Revenue Code Section 663(b) to treat all ...

How To Evaluate Service Providers as a 401(k) Fiduciary

We often receive questions from clients about their 401(k) plans and recently had a client ask two thought ...

HM&M Updates

Pearl Balsara Breaks Attendance Record at Financial Planning Association of DFW Annual Conference

Last month, Senior Manager, Pearl Balsara was invited to speak at the 2023 FPA DFW Annual Conference in ...

HM&M Excellence Awards

We are pleased to announce the winners of the 2022 HM&M Excellence Awards. Ronna Beemer, Keith Phillips, and ...

HM&M Keep on Keepin’ on Awards

Huselton, Morgan and Maultsby is composed of a spectacular team of individuals. During our annual What’s Happening Meeting, ...

Payments Client Portal