If your business was one of the hundreds of thousands that received a Payback Protection Program loan during the course of the pandemic, you need to take action now.
When the program was originally introduced, lawmakers thought they passed the Payback Protection Program so that under its provisions you didn’t pay taxes on the forgiveness amount, and you could also deduct the expenses that you paid with the money.
Unfortunately, the IRS has a different interpretation of the law.
In late April, the IRS issued a notice which basically says that the second part of the prior sentence wasn’t true and that businesses couldn’t deduct those expenses that could be forgiven, specifically payroll, rent, utilities, and interest.
Several senators and congressmen responded to the IRS in a letter stating that they got it wrong and the intention of the CARES Act was for the PPP to be a tax-free grant.
The IRS disagreed and made their position clear however: deductions were not allowed for the expense paid with the PPP money.
They basically stated that lawmakers made a mistake, and as the law is written they created the problem themselves. If they want to fix the issue, lawmakers would need to pass a new law making the deductions an explicit part of the program.
The IRS reaffirmed their position in November with additional rulings making it clear that if lawmakers don’t like it, they need to pass a new law.
That hasn’t happened yet and that’s where you come into the story. This is your chance to have your voice heard and join thousands of business owners and tax professionals urging lawmakers to fix the deductibility issue.
Here’s what you can do
To help encourage the action you desire (whether you’re for or against deductibility), get in touch with the lawmakers.
- S. 3612 is the Senate bill to make the PPP forgiveness money used to pay business expenses tax-deductible. To express your yea or nay on S. 3612, contact your senators. You can find them at this link: https://www.senate.gov/senators/contact.
- H.R. 6821 is the House bill to make the PPP forgiveness money used to pay business expenses tax-deductible. To express your yea or nay on H.R. 6821, contact your representative. You can find him or her at this link: https://www.house.gov/representatives.
Your yea or nay doesn’t need to be long or formal.
You can fax, email, or phone and simply say you support or oppose the bill. It’s that easy—and it’s effective. Do it.
Click the links above and let your representatives know your opinion on the Payback Protection Program. If you took a PPP loan for your business back at the beginning of the pandemic under the idea that you could deduct the expenses, now is the time to make sure the IRS holds up their end of the bargain.
Click those links and tell the government what they need to do when the bill hits the floor in the next few months.