In the Coronavirus Aid, Relief, and Economic Security (CARES) Act, Congress clearly intended for recipients of forgiven PPP loans to be able to deduct otherwise-deductible expenses associated with those loans for tax purposes.

 

But the IRS has contradicted congressional intent. It has declared that borrowers who expect their PPP loan to be forgiven cannot deduct those expenses on their federal tax returns.

 

The AICPA has already expressed its opposition and engaged with Congress and Treasury to work to ensure that PPP expenses are deductible.

 

Now, we need your help.

 

Tell your members of Congress to support small businesses by quickly passing S. 3612 and H.R. 6821, the Small Business Expense Protection Acts of 2020, or H.R.6754, the Protecting the Paycheck Protection Program Act.

 

This legislation will ensure that the receipt and forgiveness of coronavirus assistance through the PPP does not result in an unexpected and burdensome tax cost for organizations that complied with the terms of the PPP. Passing this legislation as soon as possible will allow small businesses more certainty as they focus on year-end business planning that is especially important in these challenging economic times.

 

Please cut and paste the following message in an email or letter to your Congressman and Senator.  Find your representatives at Congress.gov or click on this link:  US Congressmen and Senators

 

I am writing you today to strongly encourage you to include in any year-end, must-pass legislation language that will allow millions of small business owners a tax deduction for expenses paid with Paycheck Protection Program (PPP) forgiven loans.

 

Bills have been introduced in the Senate (S.3612 sponsored by Senator Cornyn (R-TX)) and in the House (H.R. 6821 sponsored by Representative Holding (R-NC) or H.R. 6754 sponsored by Representative Fletcher (D-TX)) that would ensure that PPP loan recipients are provided the full benefits intended in the CARES Act.

 

All Americans have been impacted by the COVID-19 pandemic, and your actions in Congress have provided much-needed assistance to millions of struggling businesses.

 

It is important that you ensure that these same businesses are not also subject to additional and unexpected taxes as they continue to struggle to survive.

 

Borrowers who are eligible for forgiveness of their PPP loans have spent the funds as the program directed. Unless they are allowed to deduct these expenses, they may be forced to spend additional funds to pay taxes on the loan proceeds – funds they may not have. Passing this legislation as quickly as possible will provide small business owners more certainty as they focus on year-end business planning that is especially important in these challenging economic times.

 

A voting business owner,

 

“Insert Your Name and Business”

 

Hopefully, if enough business owners contact the representatives and senators, this will have the impact that we need.  I think it is atrocious for Congress to pass legislation to help businesses in an unprecedented time, and then the IRS wants the taxpaying businesses to in effect, pay taxes on that aid.  If I remember correctly, when the savings and loan bailout happened, and billions of dollars went to prop up the savings and loans, they were still able to deduct the bad debt on their books.  I guess I should research that.

 

I hope you have a great day, and a Merry Christmas!

 

At Estess CPAs, we specialize in helping businesses save time and money. In addition to providing bookkeeping, payroll, and accounting services, we are here to advise you and help you succeed. Call us today and schedule an appointment at our Belle Chasse or Luling offices:

 

7822 Highway 23                    128 Lakewood Drive

Belle Chasse, LA 70037          Luling, LA 70070

(504) 433-5122                       (985) 785-1470