Business groups are pushing Congress to address a looming tax issue for companies that benefited from the Paycheck Protection Program.
The March economic-relief law declared that forgiven PPP loans don’t count as taxable income. But the Treasury Department later said PPP recipients who get that tax-free loan forgiveness can’t take their ordinary tax deductions for associated business expenses, calling it an impermissible double benefit.
Lawmakers in both parties said they meant to allow the deductions and have proposed legislation overturning the Treasury ruling, but they haven’t been able to get it enacted yet. A Thursday letter from trade groups including the Associated General Contractors, the National Restaurant Association, the Pet Industry Distributors Association and the U.S. Apple Association asks lawmakers to make the deductibility a priority.
“Without Congressional action, businesses will face an unexpected tax bill when they file their taxes for 2020, as they continue to struggle with government mandated shutdowns or slowdowns,” the letter says. “Many of those businesses will close and never re-open. This senseless tax policy stands both the letter and spirit of the PPP on its head.”
The deductibility provision was included in a bipartisan proposal earlier this week but not in a separate Senate Republican plan. ▪
