While PPP loan forgiveness is not subject to Ohio CAT, Ohio clarifies that EIDL grants and other county-issued relief are subject to the Ohio CAT.
While generally debt forgiveness is treated as taxable gross receipts for Ohio’s Commercial Activities Tax (CAT) pursuant to R.C. 5751.01(F). In an effort to provide some taxpayer relief in the wake of COVID-19, Ohio House Bill 481 (enacted in June 2020) allows for the exclusion from gross receipts the forgiven amount of a Paycheck Protection Program (PPP) loan excluded from gross income for federal income tax purposes under IRC 1106(i) of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).
However, the Ohio Department of Taxation has recently issued guidance that this relief does not extend to Economic Injury Disaster Loan (EIDL) advance grants and other county-issued relief grants.
The Department updated its FAQs on its COVID-19 tax relief page setting forth its guidance that EIDL advance grants authorized by the CARES Act are included in gross receipts for Ohio CAT purposes.
Further, COVID-19 relief grants issued by counties are also taxable gross receipts according to the Department’s FAQs. Please contact us if you have any questions or would like to discuss further.