FEDA has added the association’s name to a letter addressed to Congressional leaders supporting the Small Business Expense Protection Act, which seeks to ensure small businesses may deduct from their taxes eligible expenses paid for by a forgiven Paycheck Protection Program loan. Without this relief, millions of small business may face significant tax liabilities while they are still trying to stabilize and recover from the COVID-19 pandemic.
The bill would reinforce Congress’ intention when it passed the CARES Act in March, which was designed to shield businesses from major liquidity shortfalls, retain employees, and withstand the economic disruption caused by COVID-19. However, the IRS issued a rule that normally deductible business expenses would not be deductible if the business paid for it using a PPP loan that was later forgiven.
“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 intend,” the letter says. “We thank Congressional leaders for their ongoing efforts and urge swift passage of this bipartisan legislation.”
The full letter may be read here.