Government Affairs - PPP Recipients No Longer Face Surprise Tax Under 2021 Wisconsin Act 1

Wisconsin businesses who had been facing hundreds of millions of dollars in unexpected state tax liability on loans they received from the federal Paycheck Protection Program (PPP), can rest easy now with the enactment of Assembly Bill 2 - this session’s first piece of legislation signed into law by Governor Evers as 2021 Wisconsin Act 1. The Paycheck Protection Program was part of the $2.2 trillion CARES Act passed by Congress in March 2020 to help keep small businesses afloat during the pandemic. Any PPP loan proceeds used for qualifying costs i.e. payroll, health insurance for paid sick, medical, or family leave, mortgage interest payments, rent and utility payments, and 60% of the loan proceeds are used for payroll costs, the federal government forgives the loan. While a loan does not generate taxable income, a forgiven loan generally does. Congress took steps to address this issue by clarifying that forgiven PPP loans under the CARES Act are not included in taxable income for federal tax purposes. But some states like Wisconsin were looking at PPP loans as taxable income and a revenue generator for state coffers. Wisconsin businesses were facing a tax increase to the tune of about $450 million. A large coalition of statewide business groups, including IIAW, quickly organized with grassroots member advocacy and lobbying state lawmakers to deal with this issue. Legislators in both parties and the Evers Administration acknowledged they were overwhelmed by the thousands of communications they received from local businesses and constituents all across the state. It was an impressive, collective, grassroots effort assembled in a short amount of time and a prime example of the importance and value of membership in a trade association like the IIAW. On behalf of our members and their customers, the Association thanks all 114 legislators who voted in a bipartisan manner to support the bill and keep our economy moving forward.

IIAW, working in conjunction with other major business associations, has been working since last year advocating with state lawmakers on the importance of passing COVID-19 liability protections for our state. Following several failed attempts at passing legislation and through lots of subsequent negotiations with stakeholders, a measure to protect businesses, schools, non-profit organizations and other entities from civil lawsuits related to the Coronavirus pandemic, is now closer to becoming law. Special Session Senate Bill 1 overwhelmingly passed the State Senate on a bipartisan 27-3 vote and the Assembly is slated to also pass it. Governor Evers has publicly stated that he intends to sign the bill into law as part of other measures dealing with updating the state’s Unemployment Insurance (UI) system. The liability protection language was added as an amendment to separate legislation that Evers has prioritized with the state’s outdated UI system that has been overburdened by the pandemic due to the volume of claims. Under the amended bill, reasonable protections are created from civil liability caused by an act or omission resulting in exposure to COVID-19. Such protections would not apply if the entity engaged in reckless or wanton conduct or intentional misconduct. The legislation would help ensure that business and other entities are implementing protocols to protect public health and welfare by affording them protection from potentially bankruptcy-causing lawsuits. The bill also gives employers a needed level of certainty that they will be protected from such liability and would help ensure businesses are comfortable reopening and staying open. If Wisconsin’s economy is going to successfully rebound from the global pandemic, our members and their customers cannot be hampered with the threat of lawsuits tied to COVID-19.

Having a fair and predictable state liability system is vitally important for a stable insurance climate and the Association applauds the members of the Legislature for working hard to get the job done.

Governor Tony Evers (D) delivered virtually his 202123 executive state budget plan to the Legislature this month proposing an overall operating budget of $91 billion over a two year period. Evers’ 1,846page budget proposal will be carefully examined and changed by the Legislature’s 16-member Joint Finance Committee over the next several months before both houses of the Legislature debate and take votes until a final budget bill is passed by both houses. • The Joint Finance Committee will hold agency briefings and conduct public hearings on the budget

• The Joint Finance Committee will then begin to vote – agency by agency – on changes to the budget and send its version to the the Assembly and Senate

• In June, the budget will be debated and eventually passed by both houses of the Legislature

•The Governor will review budget for potential line item vetoes and sign bill into law

See more details on the Governor’s budget proposal at http://bit.ly/MarchGovAffairs.

IIAW Lobbyist

Robertson Ryan has been offering innovation through our unique Agent Owner structure since inception in 1960. Time and time again after an agent or agency joins us they say, “We wish we did this years ago.” Our team recognizes the strength and power behind the agent and insured relationships so we’ve built, and continue to fine-tune, a support network rewarding those affiliated with RRA.

Find more at, www.RobertsonRyan.com/AgentOwner ...and let’s connect. Call or email me 414.221.0363 or cillman@robertsonryan.com. I look forward to answering your questions!

Chris Illman, CEO

www.RobertsonRyan.com