Struggling Businesses Including PPP Recipients Facing Half-Billion Dollar Tax Increase
Second Hit Coming to Businesses After Many BIG Program Applicants Fail to Receive Financial Support
Gov. JB Pritzker has announced plans to pull a lifeline away from struggling family-owned businesses across the entire economic spectrum, hitting them with more than $500 million in new taxes. This follows the news that many of these same businesses did not receive any financial assistance through the state’s Business Interruption Grants (BIG).
In March 2020, an overwhelming bipartisan majority of Congress, including every single member of the Illinois congressional delegation, passed the CARES Act to aid small businesses during the global pandemic, including a tax change to help companies experiencing losses. This aid was targeted at pass-thru entities (e.g. partnerships, LLCs, and not C corporations). Pass-thru entities are typically independent business owners, not large corporations. The CARES Act increased the Net Operating Loss provision so that companies could offset up to 100 percent of their income through the end of 2020 when the Act expired. The economic stimulus expired on December 31, 2020, and now employers are being hit with a tax hike and will see a massive change in cash flow after a year of difficult tax and accounting decisions, including the possibility of taxation of the Paycheck Protection Program funds which kept many businesses afloat.
When passed in March, Pritzker noted “this was a record-breaking emergency relief package and much needed for our state.”
The state’s business community is united in opposition to the governor’s plan and issued the following statement:
“We urge the Governor and legislature to reject this massive tax increase at a time when thousands of small businesses across the entire state are struggling to stay afloat during a pandemic and government-imposed shutdowns. This will have a dramatic impact on every aspect of business, including some of our most decimated industries. We understand the desire to find revenue, but this is the opposite of an ‘all-in’ approach.”
Chicagoland Chamber of Commerce
Grain and Feed Association of Illinois
Hospitality Business Association of Chicago
Illinois Chamber of Commerce
Illinois Hotel & Lodging Association
Illinois Licensed Beverage Association
Illinois Manufacturers’ Association
Illinois Retail Merchants Association
NFIB
Technology & Manufacturing Association
Valley Industrial Association
