Senate Finance Committee Chairman Chuck GrassleyCharles (Chuck) Ernest GrassleyOn The Money: Push for student loan forgiveness puts Biden in tight spot | Trump is wild card as shutdown fears grow | Mnuchin asks Fed to return 5 billion in unspent COVID emergency funds Grassley, Wyden criticize Treasury guidance concerning PPP loans IRS races to get remaining stimulus checks to low-income households MORE (R-Iowa) and ranking member Ron WydenRonald (Ron) Lee WydenOn The Money: Push for student loan forgiveness puts Biden in tight spot | Trump is wild card as shutdown fears grow | Mnuchin asks Fed to return 5 billion in unspent COVID emergency funds Grassley, Wyden criticize Treasury guidance concerning PPP loans The FCC is trying to govern content moderation: It doesn’t have the authority MORE (D-Ore.) on Thursday criticized new Treasury Department guidance about the tax treatment of expenses related to Paycheck Protection Program (PPP) loans, asking the department to revisit its approach.
“We encourage Treasury to reconsider its position on the deductibility of these expenses, and the timing of those deductions, to provide relief to the small businesses that need it most,” Grassley and Wyden said in a statement.
The PPP is a coronavirus relief program under which small businesses received loans that can be forgiven if the proceeds are used to maintain payroll. The legislation that created the PPP includes a provision stating that the loan forgiveness is not considered taxable income.
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Under guidance Treasury and the IRS issued late Wednesday, if a business hasn’t had its PPP loan forgiven at the end of the year but expects the loan to be forgiven in the future, the company cannot deduct expenses related to the loan, even if the business hasn’t yet filed for forgiveness.
The guidance follows a notice Treasury and the IRS issued in the spring stating that expenses associated with loan forgiveness under the PPP are not deductible.
Treasury Secretary Steven MnuchinSteven Terner MnuchinGrassley, Wyden criticize Treasury guidance concerning PPP loans Mnuchin asks Fed to return 5 billion in unspent COVID-19 emergency funds We need a new COVID-19 stimulus package now MORE said in a statement Wednesday that the new guidance gives taxpayers more clarity.
“These provisions ensure that all small businesses receiving PPP loans are treated fairly, and we continue to encourage borrowers to file for loan forgiveness as quickly as possible,” he added.
But Grassley and Wyden said in their statement that the new guidance, along with the guidance issued earlier this year, goes against lawmakers’ intention that small businesses receiving PPP loans be able to take deductions for ordinary and necessary business expenses.
“Regrettably, Treasury has now doubled down on its position in new guidance that increases the tax burden on small businesses by accelerating their tax liability, all at a time when many businesses continue to struggle and some are again beginning to close,” the senators said. “Small businesses need help maintaining their cash flow, not more strains on it.”
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