AGD Joins with Coalition to Call for Changes to Deductible Expenses for Paycheck Protection Program Loans
On May 7, AGD joined with a coalition to call for changes to the deductive expenses for the Paycheck Protection Program (PPP) loans.
The letter specifies that on Thursday, April 30, the Internal Revenue Service (IRS) issued Notice 2020-32 which “clarifie[d] that no deduction is allowed under the Internal Revenue Code (Code) for an expense that is otherwise deductible if the payment of the expense results in forgiveness of a covered loan pursuant to section 1106(b) of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).” The coalition explains that this is at odds with the legislative text of the CARES Act, specifically Section 1106(i), which says that, with regard to the “taxability” of the loan forgiveness available to Payroll Protection Program (PPP) recipients, any amounts forgiven by a PPP loan “shall be excluded from gross income” (emphasis added). The impact of this IRS ruling is significant, and the coalition's letter asks for guidance from the IRS as well as a request to amend the CARES Act in future legislation that would explicitly waive Code Section 265 from applying to PPP loan forgiveness.
Read the full letter.
The letter specifies that on Thursday, April 30, the Internal Revenue Service (IRS) issued Notice 2020-32 which “clarifie[d] that no deduction is allowed under the Internal Revenue Code (Code) for an expense that is otherwise deductible if the payment of the expense results in forgiveness of a covered loan pursuant to section 1106(b) of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).” The coalition explains that this is at odds with the legislative text of the CARES Act, specifically Section 1106(i), which says that, with regard to the “taxability” of the loan forgiveness available to Payroll Protection Program (PPP) recipients, any amounts forgiven by a PPP loan “shall be excluded from gross income” (emphasis added). The impact of this IRS ruling is significant, and the coalition's letter asks for guidance from the IRS as well as a request to amend the CARES Act in future legislation that would explicitly waive Code Section 265 from applying to PPP loan forgiveness.
Read the full letter.