California business owners stunned to discover a tax on Paycheck Protection Program loan

'I don't think it's fair at all. We are the industry that has been held hostage.'
FRESNO, Calif. (KFSN) -- Struggling Valley businesses that received loans through the Paycheck Protection Program to stay afloat are now worried about an added tax burden.

Sal's Restaurants relied on the Paycheck Protection Program to keep its three Valley locations going.

But co-owner Lorraine Salazar learned she'd have to pay taxes on the federal loan.

Salazar said, "I don't think it's fair at all. We are the industry that has been held hostage, along with the hair and nail salons and the gyms."

Sal's received over $350,000 in PPP funds and Salazar already paid taxes which were due for one of her companies.

She said, "We had to pay $55,000 in taxes just on the federal and it was another $7,000 or $8,000 on the state that was not anticipated."

Salazar has filed an amended tax return in hopes of getting the federal taxes back.

She added the governor was pushing to make the first $150,000 of a PPP loan not taxable.

But State Senator Andreas Borgeas, (R) Fresno, didn't think any emergency funding should be taxed.

Borgeas said, "Tax season is only weeks away and I think a lot of folks might be surprised that they could be, that they could incur some type of tax liability unless some substantial changes are made."

Borgeas believed his Senate Bill 265 offered a solution.

He said, "In a perfect world, 265 makes certain that all funding is a non-taxable event. Small businesses have suffered a lot."

Borgeas hoped his bill could quickly move through the legislative process.
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