Update on Deduction of COVID Related Expenses Legislation
As reported in the March Newsletter, the deduction of COVID-related expenses outlined in MSCPA’s HB1529 which was signed by the Governor were later nullified due to a legislative date issue which conflicted with the Medical Marijuana Bill. The language to correct the problem was successfully placed in several other bills that were still alive, including HB1685 which passed. The tax treatment on the income side to exclude the funds from MS taxable income were not affected by the date issue and stands per HB1529 as written.
Therefore, the State tax treatment to align with federal are now in effect for the COVID related loans and grants addressed in the 2022 legislation as follows:
• Aligns the MS treatment of PPP#2 loan forgiveness, Shuttered Venue Operator Grants, and grants received from the Restaurant Revitalization Fund with the federal treatment to exclude such amounts from MS taxable income and allow the deduction of the expenses paid with such funds. Of note, the deduction of expenses paid with PPP#2 was granted in the 2021 Legislative session.
• In addition, the bill excludes grants received from the Mississippi Agriculture Stabilization Act from taxable income and provides for the deduction of expenses paid with these grants.
• The bill is retroactive to January 1, 2020.
MS treatment of both PPP#1 and PPP#2 loan forgiveness and the deductibility of related expenses are aligned with federal via 2021 and 2022 legislation advocated by MSCPA.