ICBA and more than 500 other groups called on Congress to pass a technical correction amending the CARES Act to explicitly provide that PPP loan-forgiveness funds that cover business expenses are tax deductible.
In a joint letter, the groups said that while the CARES Act states that any portion of a PPP loan that qualified for loan forgiveness “shall be excluded from gross income” for tax purposes, the IRS determined that no deduction is allowed.
The IRS ruling transforms tax-free loan forgiveness into taxable income, raising the specter of a surprise tax increase of up to 37 percent on small businesses, the groups said.
ICBA has repeatedly urged Congress to pass the Small Business Expense Protection Act (S. 3612/H.R. 6821) to make the correction.
