Coronavirus Relief Program Protects Business Expense Deductions for PPP Recipients
The $ 900 billion coronavirus relief program developed by federal lawmakers includes wording ensuring that small businesses that have borrowed money under the Paycheck Protection Program can deduct covered expenses to the payroll. ‘subsidy loan assistance from the program. See the text of the invoice.
The IRS issued a notice on April 30 prohibiting the deduction of expenses paid with the proceeds of the P3 loan if the loan is canceled. Last month, the IRS issued a tax decision indicating that these expenses cannot be deducted if the loan is repayable, whether or not the recipient has requested a remission.
The decisions took small business owners who had taken advantage of the program by surprise, with many saying unexpected tax obligations could force them out of business. See previous cover: “‘It’ll kill us’: Small business owners face surprise tax in P3 loan program”
On December 9, a bipartisan coalition of 179 members of the House of Representatives, including NY-1 Representative Lee Zeldin, asked House leadership to include “a fix” in the new coronavirus assistance program to allow paycheck protection program loan recipients to take the normal deductions for business expenses paid with the loan proceeds.
The bipartite leadership of the House Ways and Means Committee and the Senate Finance Committee had already published public statements saying the IRS decision was contrary to Congress’ intent for the PPP, which was part of the CARES Act.
“The Paycheck Protection Program has helped relieve so many of these small businesses, which have been shut down by the government or are struggling, and we need to make sure that those small business owners who desperately need it of this funding to survive does not go away. under thanks to a surprise tax bill caused by the very relief that’s supposed to keep them afloat, ”Representative Lee Zeldin said in a statement this afternoon.
Since March, more than 5 million PPP loans have been granted to companies in all fifty states.
Without Congressional action, small businesses would be liable for about $ 120 billion or more in taxes on repayable PPP loans, according to the letter from lawmakers.
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