Greg Reibman, President of the Newton-Needham Regional Chamber has been sending a daily e-newsletter since COVID started in March, and this was in his one today –
IRS PPP ruling adds another 2020 hurdle
I hate to spoil your appetite one day before the big event but here’s the latest on the PPP.
Earlier this year, the IRS ruled that expenses (like payroll) that businesses typically deduct from their taxes aren’t tax deductible if they used PPP dollars to pay for them.
Last week, the IRS issued new guidance prohibiting any small business that has a reasonable expectation of eventually receiving PPP loan forgiveness from deducting those expenses in 2020, even if it takes until 2021 or 2022 to be granted forgiveness, or if the business hasn’t submitted a forgiveness application yet, writes Andy Medici for the BBJ.
In other words: The IRS has just made it harder for businesses that are desperately trying to survive this pandemic by eliminating a potential strategy to defer their 2020 tax liabilities for one year while waiting for the economy to rebound.
Or as one expert tells Medici: “Without the PPP, small businesses would have laid off staff, saving on expenses and saving cash. The only reason they kept staffing levels is because of the PPP, and the IRS is effectively punishing that action by pretending it wasn’t a legitimate business expense.”
Interested in a sharp stick in the other eye (related to federal COVID relief support for our businesses)? Try this.