The American Soybean Association and 564 business groups called on Congress to overturn IRS Notice 2020-32 and allow Paycheck Protection Program loan forgiveness to be entirely tax-free.
Although the Coronavirus Relief and Economic Security Act included a provision stating that any portion of a PPP loan that qualified for loan forgiveness “shall be excluded from gross income” for tax purposes, the IRS later issued a notice which specified that “no deduction is allowed under the Internal Revenue Code if the payment of the expense results in forgiveness of a covered loan under section 1106b of the CARES Act.”
This ruling was enacted after PPP loans became available and were distributed, and it transforms tax-free loan forgiveness into taxable income.
In a letter to Congressional leadership, the groups highlighted the sense of urgency to reverse the IRS ruling before the end of the year to prevent a potentially significant tax increase on small business owners who applied for and spent their PPP loans before the notice came out.
Many of those business owners are still struggling with government-mandated shutdowns or slowdowns.
(Story Courtesy of the NAFB News Service)