According to the Mass Department of Revenue at:  Tax Filing Season Frequently Asked Questions | Mass.gov, Massachusetts is not currently providing the same tax-free treatment to the PPP Loans and EIDL advance as the federal government.  There is still a chance that legislation will be passed soon to address this situation.

Unless new laws are enacted, practice owners should follow these rules as outlined by the Mass Department of Revenue:

 PPP Loans:

Any amount forgiven under the CARES Act is includable in gross income and subject to tax [but] should only be recognized when formal acknowledgement of loan forgiveness from the U.S. government is received.

EIDL Advance:

For taxpayers subject to the Massachusetts personal income tax, including unincorporated businesses reporting income and expenses on Schedule C, partners in a partnership, and individual shareholders of an S corporation, they are includable in gross income and subject to tax.

Other Grants:

Federal law requires that grants to businesses be included in gross income.  The IRS has specifically stated that if governments use CARES Act Coronavirus Relief Fund payments to establish grant programs to support business, businesses receiving such grants must include the grant amount in their federal gross income.  Because these grants are taxable under federal law, they are also taxable under Massachusetts law. 

 We are closely monitoring whether Mass will pass legislation to change how these grants and subsidies will be taxed to healthcare providers with offices in Massachusetts.  Due to this uncertainty, we are not rushing to complete the tax returns for our clients who own practices and received these grants and subsidies.

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