North Carolina Businesses May Need to File Amended Returns

I’m sure that everyone has completed their tax returns for federal and state by now. If you haven’t, shame on you. But those who took advantage of PPP loans may need to amend their returns. Here is the scoop.

Back in June 2020, the North Carolina General Assembly passed S.L. 2020-58. That law excluded forgiven PPP loan funds from North Carolina taxable income. For Federal tax purposes, deductible expenses paid with forgiven PPP loan funds were deductible on your Federal tax return. However, the same deductible expenses were non-deductible on your North Carolina state tax return.

This remained the same throughout 2020 and most of 2021 for North Carolina. But the North Carolina General Assembly passed S.L. 2021-180 in November of 2021. This law now provides the deductible expenses paid with forgiven PPP loan funds are deductible for years 2020, 2021, and 2022 for North Carolina state taxes.

This means that if you included deductible expenses paid with forgiven PPP loan funds in taxable income on your tax return, you will need to amend it. The North Carolina Department of Revenue is not going to automatically adjust your tax return nor will it automatically refund any overpayment resulting from this late change. You are going to have to complete an amended North Carolina tax return for 2020 to reduce your taxable income according to the new law.

I strongly recommend that you consult with your accountant about filing an amended 2020 North Carolina income tax return.

Good luck and don’t let the government keep your money. Take care.