Governor Gavin Newsom this month signed two CalTax-supported bills that provide selective conformity to the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act.
On September 9, Newsom signed AB 1577 (Burke), which conforms to provisions in the CARES Act relating to the Paycheck Protection Program (PPP). Conformity ensures that taxpayers who utilized a PPP loan under terms set by Congress will not be punished with an unexpected state income tax bill.
In a letter to the governor, CalTax noted: “By conforming to the provisions that exclude these forgiven and covered loans from gross income, California would prevent these taxpayers from receiving a sudden and unexpected tax bill, at a time when many taxpayers are struggling to remain solvent.”
On September 11, the governor signed AB 276 (Friedman), which conforms to CARES Act provisions regarding the early withdrawal of funds from employer retirement plans made by taxpayers. Under the conformity legislation, taxpayers who utilized retirement loans will not be hit with the normal early withdrawal penalty and will have an extended timeframe to repay the loan. The bill also raises the cap on the maximum loan amount permitted.