Senate Finance Committee Chairman Chuck Grassley (R-Iowa), Ranking Member Ron Wyden (D-Ore.) and House Ways & Means Committee Chairman Richard E. Neal (D-Mass.) today wrote to Treasury Secretary Steven Mnuchin urging the department to change its flawed interpretation of the CARES Act preventing businesses from deducting expenses associated with Paycheck Protection Program (PPP) loans that are ultimately forgiven.
“Providing assistance to small businesses, only to disallow their business deductions as provided in Notice 2020-32, reverses the benefit that Congress specifically granted by exempting PPP loan forgiveness from income. This interpretation means that whatever income a small business is able to produce will be taxed on a gross basis to the extent of the loan forgiveness, leaving substantially less after-tax capital for the swift economic recovery we hope is on the horizon,” the lawmakers wrote.
Grassley, Wyden and Neal specifically argue that the determination adopted by IRS and Treasury runs contrary to congressional intent underlying the PPP program and the CARES Act overall.
Full text of the letter from Grassley, Wyden and Neal follows or can be found HERE.