PPO Loan Law Update
During the 2022 Virginia General Assembly Session, legislation was enacted to conform with the Internal Revenue Code’s Covid-19 response legislation. Tax Bulletin 22-1 was released on February 23, 2022 and provides in depth information about the relief. Here are some important updates about the treatment of forgiven Paycheck Protection Program (PPP) proceeds:Taxable Year 2020: The law remains the same – a Virginia-specific deduction for $100,000 in business expenses that were paid or incurred and are funded by forgiven PPP proceeds during Taxable Year 2020, is allowable on the 2020 tax returns. Taxable Year 2021: Virginia will conform to the federal tax law treatment of the COVID-19 business assistance programs for tax year 2021 and after. No adjustment is required on the 2021 Virginia income tax returns for taxpayers that have business expenses funded by forgiven PPP loan proceeds, EIDL program funding, and Restaurant Revitalization grants during 2021.