On November 19, 2020, Chris Moran was quoted in Bloomberg Tax on IRS rules limiting tax breaks for businesses that get their Paycheck Protection Program (PPP) loans forgiven.
According to the article, Senate Finance Chairman Chuck Grassley and Democrat Ron Wyden said in a joint statement that the Treasury Department is depriving some small businesses of much-needed economic relief by forcing them to choose between getting their PPP loans forgiven or claiming write-offs on expenses they covered with the loan money. The lawmakers also said they are working to include language in year-end legislation clarifying that taxpayers qualify for expense deductions even if their loans are forgiven.
Moran said, “the IRS guidance seems to be inconsistent with congressional intent” in the Cares Act, which created PPP loans for businesses struggling from the pandemic. The law stated that the forgiven loan won’t be taxed, but didn’t specify whether companies could still write off the expenses they covered with that money.
Excluding the forgiven loan from tax “is essentially meaningless if the expenses funded by the loan are nondeductible,” Moran said.