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New Directive from the Governor and Taxes

Posted on June 18th, 2021

Tax Planning Attorney in Bozeman, MT

Tax Planning Attorney in Bozeman, MT

Here I sit, with just a moment to breathe. Our phones have been ringing off the hook since the Governor and certain counties issued new directives towards Montana’s bars, restaurants and casinos, in an effort to curb or slow down the rising number of Covid cases in Montana. Governor Bullock’s new mandate, which goes into effect at 5 a.m. on Friday, November 20, 2020, requires the wearing of masks in public places, require six feet distancing between groups or tables, reduced seating capacity to 50%, close by 10pm, and no public gatherings greater than 25 people. The Alcoholic Beverage Control Division recently released a memorandum reiterating the Governor’s directive.

If you received the Montana Business Stabilization Grant in the past, then you should have received an email from the Montana Department of Commerce notifying you that Governor Bullock was making an additional $75 million available through the CARES Act funding that Montana received from the federal government. All you needed to do was simply click the link to be taken to the web page to request the funds, up to another $10,000 in funds. The funds had to be used to support your business operations by December 30, 2020, for things such as “payroll, rent, accounts payable, debt service and expenses related to shifts in operations in order to retain existing businesses, retain current employees or retain business viability for future re-employment.” One new requirement for the additional Business Stabilization Grant funds is that you have to agree that your business “will comply with all state and local COVID directives, including but not limited to requiring masks in your establishment, social distancing, maximum capacities, and closing time restrictions.” We have no clue how this new set of requirements will be enforced or who will enforce it, so it appears to be an “on your honor” type of requirement. 

Recently, the Internal Revenue Service (“IRS”) issued new guidance directing all businesses that received state grants and were forgiven for PPP loans, are not allowed to deduct any expenses directly related to receiving the state level grants or forgiveness of the federal PPP loans. We do know that many members of congress across the country were not happy with the IRS’ interpretation, so we will have to see what happens. Hopefully we, as tax professionals and taxpayers, will be able to get final guidance on this quandary before our taxes are due. Remember, if any part of your PPP loan or EIDL loan is not forgiven, then any expenses that you pay with the loan proceeds, are deductible. The big difference here is that the amounts that you can deduct must correspond with amounts of state or federal funds that you “must” pay back as part of a loan. My ultimate recommendation when it comes to filing your 2020 tax returns, is to go on extension. We all know that congress won’t get this figured out anytime soon, so why file your tax returns timely, only to have to amend your returns because Congress comes up with a late solution.

Finally, we get asked all the time, whether or not there will be another round of stimulus to bail out the many suffering businesses during this pandemic. I, for one, am not holding my breath. I hope that for everyone, business owners, employees, and the millions of Americans that are currently unemployed, that congress does come up with another stimulus package. If Congress does not come up with an extension to unemployment, then many of the unemployed in the hospitality industry will lose their unemployment shortly after Christmas. 

Let us all hope that Santa Claus can bring a little holiday cheer with some really good news in a really short order. Stay safe everyone, and make it a Merry Christmas!

If you are facing a tax planning issue and need legal guidance, contact a tax planning attorney in Bozeman, MT, like the professionals at Silverman Law Office, PLLC.


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