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Lawmakers push for PPP change that would give them tax break

Didn’t disclose PPP loans until questions from WBTV
Updated: Apr. 19, 2021 at 4:01 PM EDT
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RALEIGH, N.C. (WBTV) – House Speaker Tim Moore (R-Cleveland) called early in the evening of Tuesday, April 13 in response to a request from WBTV.

The station wanted to talk with Moore on camera about his efforts to push a bill that would change North Carolina’s tax code with respect to PPP loans.

The email requesting an interview hit Moore’s inbox at 2:29 p.m. that afternoon. He was calling at 5:36 p.m.

“I just want you to know that I have not advocated for that bill,” Moore said.

Instead, the Speaker insisted, it would be better to talk with the bill’s two primary sponsors, Rep. Jason Saine (R-Lincoln), a senior appropriations chairman, and Rep. Ray Pickett (R-Watauga), a freshman member in the first months at the legislature.

But in the hours before that phone call, in which Moore claimed to have no involvement in the bill, he instructed House leadership to tell Rep. Julia Howard (R-Davie), the senior chair of the House Finance Committee, to hear the bill in committee that day.

“I was given orders from the Speaker that we would hear this PPP bill today,” Howard said when she opened the committee meeting at 6:00 p.m. Tuesday.

The bill passed the committee with a unanimous voice vote, without any public disclosure that many of the lawmakers pushing for the bill owned businesses that accepted PPP money.

That wouldn’t become public until days later, when Moore and other House members held a last-minute press conference in response to requests for interviews sent by WBTV for this story.

Conforming or tax break?

The bill being pushed by Moore and others would change how North Carolina treats PPP loans given to businesses during the COVID-19 pandemic

Under a law passed last year, the state currently does not tax PPP loans as income but also prevents businesses from deducting the PPP money that was spent as an expense, functionally making the money a wash.

Under the proposals to change the law, PPP loans would remain un-taxed and companies could count the PPP money spent as an expense for the purposes of a tax deduction.

The latter reflects the change to the federal tax code made late last year. Since that time, Moore and other supports have pointed out, 47 states have changed their codes to max the U.S. government.

The House bill sponsored by Saine and Pickett passed the house with bipartisan support—just two members voted against—on Thursday. But its fate in the Senate is unclear.

Rep. Keith Kidwell (R-Beaufort) has touted the rule change as another lifeline for struggling small business owners.

“There’s a lot of loans out there for $1,000, $5,000, $10,000. There’s (sic) some very small loans out there,” Kidwell said.

Bill supports would see big breaks

Among the bill’s most vocal supporters in the legislature are business owners whose companies received loans.

Moore’s law firmed received two loans totaling more than $25,000, records show.

Rep. John Bradford (R-Mecklenburg), a Finance Committee chairman who has advocated for the bill, runs two companies that received nearly $400,000 combined, according to records.

Senator Chuck Edwards (R-Henderson), the primary sponsor of the Senate bill to change the tax rule, owns a business that accepted a PPP loan of more than $1.1 million.

None of that information was public before WBTV began asking questions.

Bradford did disclose the fact that his companies took PPP loans to members of the House Republican Caucus during a closed-door debate over whether to support the bill, according to multiple lawmakers, who spoke with WBTV on the condition they not be named in order to discuss private deliberations.

But Moore did not make such a disclosure, those same sources said.

At Thursday’s press conference, Moore touted the fact that he got an ethics opinion clearing the way for his involvement in this bill.

Although he told a WBTV reporter during the press conference he would provide a copy of the opinion, he never sent a copy.

But the timeline on when he got the opinion shows he didn’t seek guidance until after he’d begun pushing for the bill’s passage.

According to Moore, he received the opinion on Tuesday, after the caucus discussion and after WBTV had started asking questions for this story.

Moore said he didn’t need an ethics opinion before advocating for the bill.

“Nick, I’m an attorney, I understand the laws, OK?” Moore said, when pressed why he didn’t obtain an ethics opinion before pushing for the bill. “I know what the law says.”

‘I came here to Raleigh to represent the interests of business’

Edwards, the primary sponsor of the Senate bill, said he didn’t view his company’s PPP loan as a possible conflict of interest in pushing a bill to change how PPP loans would be taxed.

“I wasn’t at all concerned because I wasn’t—and have not been—acting on my behalf,” Edwards said.

Edwards said he heard from many businesses in his district that want the state to adopt the federal government’s tax treatment of PPP loans.

If the rule change were to pass, Edwards business would see a reduced tax liability of at least $40,000 to $50,000.

“This legislation does not lend itself to any particular group, it is extended over a broad base of business owners,” Edwards said.

“I came here to Raleigh to represent the interests of business. I think that what makes the legislature in North Carolina so strong is that we have a diverse group of backgrounds and that we should relay on the experience from that diverse group of backgrounds to formulate legislation that effectively represents the citizens of North Carolina.”

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