Farmers, ranchers and other small business owners are calling on Congress to approve the Small Business Expense Protection Act (S. 3612, H.R. 6821), which would allow small businesses to deduct expenses paid with a forgiven Paycheck Protection Program loan from their taxes.
Without this relief, millions of small businesses will face significant tax liabilities at a time when they can least afford additional financial burdens, the American Farm Bureau Federation and more than 115 other organizations warned House and Senate leaders.
Created by Congress in the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the PPP was designed to help small businesses survive major liquidity shortfalls, retain employees and withstand an unprecedented economic disruption due to the COVID-19 pandemic.
However, the program is undermined by an IRS rule that says normally deductible business expenses will not be deductible if the business pays the expense with a PPP loan that is subsequently forgiven. As the groups pointed out in the letter, the tax rule runs counter to lawmakers’ intent that the forgiven PPP loan amount should not be taxed as income.
“The Small Business Expense Protection Act will fix this misinterpretation and reestablish the ability of small businesses that have received PPP loans to deduct business expenses as the CARES Act intends,” the groups said in a letter to House Speaker Nancy Pelosi (D-Calif.), House Minority Leader Kevin McCarthy (R-Calif.), Senate Majority Leader Mitch McConnell (R-Ky.) and Senate Minority Leader Chuck Schumer (D-N.Y.).
The Small Business Expense Protection Act has been referred to the House Ways and Means Committee and the Senate Finance Committee.
Producers can continue to apply for assistance from the Paycheck Protection Program until August 8th.
American Farm Bureau Federation
I hate to say it but that ship has already sailed. Most of the monies should have already been distributed as wages by now. Maybe there needs to be separate funds available for expenses with adequate wording to begin with. The original assistance did what it was intended for, pay wages, not pay off debt.