The top Republican and Democrat on the Senate Finance Committee said the Treasury Department “missed the mark” in new guidance that limits tax breaks for businesses that get their Paycheck Protection Program loans forgiven.
In a joint statement Thursday, Senate Finance Chairman Chuck Grassley and Democrat Ron Wyden said the Treasury is depriving some small businesses of much-needed economic relief by forcing them to choose between getting their PPP loans forgiven or claiming write-offs on expenses they covered with the loan money. The IRS published guidance on the issue Wednesday.
“Regrettably, Treasury has now doubled down on its position in new guidance that increases the tax burden on small businesses by accelerating their tax liability, all at a time when many businesses continue to struggle and some are again beginning to close,” Grassley and Wyden said.
The congressional reaction to the guidance puts additional pressure on the Treasury and Internal Revenue Service to allow taxpayers to claim the expense deductions. Grassley and Wyden encouraged the IRS to reverse its position.
The lawmakers said they are working to include language in year-end legislation clarifying that taxpayers qualify for expense deductions even if their loans are forgiven. That could be included in government spending legislation that Congress must pass by Dec. 11 before federal funding runs out.
Chris Moran, a tax attorney for law firm Venable LLP, said, “the IRS guidance seems to be inconsistent with congressional intent” in the CARES Act, which created PPP loans for businesses struggling from the pandemic. The law stated that the forgiven loan won’t be taxed, but didn’t specify whether companies could still write off the expenses they covered with that money.
Brendan Miller is a principal analyst at Forrester Researching, serving digital business professionals. His research focuses on retail digital transformation, consumer insights, payments, and eCommerce trends in the age of the customer. Brendan has specific expertise in helping retail leaders understand the opportunity derived from payments as well as the vendors that facilitate the delivery of leading digital experiences. His interests include emerging digital payments, rebuilding checkout experiences for our mobile world, retailer security and risk challenges, and insights into the state of the digital shopper.
Brendan’s research and analysis have been widely cited in publications including The New York Times, USA Today, Bloomberg, Fortune, Barron’s, CNBC, as well as NPR, The Los Angeles Times, and Financial Times.
Previous Work Experience
Prior to Forrester, Brendan spent 20 years as a B2C and B2B marketer, spanning technology, services, retail, CPG, and durable goods. Most recently, he led product marketing duties at payment firms, such as First Data, Mercury, and Vantiv. Prior to working in payments, he held B2C marketing leadership roles at Pulte Group and Graham Advertising (a leading automotive advertising agency), and he was also a managing director of a market research and strategy firm.
Education
Brendan holds a BBA in marketing/management from Northwood University in Midland, Michigan, as well as an MBA from the University of Denver, Daniels College of Business.
Dan Hanson is an insurance and risk management professional with Marsh & McLennan Agency.
Mark Monsees is a senior consultant at Samaha & Associates.
Excluding the forgiven loan from tax “is essentially meaningless if the expenses funded by the loan are nondeductible,” Moran said.
Still, many taxpayers aren’t expecting to get permission to claim the deductions, from the IRS or Congress, in the short term.
“I think most of them are, at least for now, resigned” to not getting the write-offs, Joe Kristan, a partner at the accounting firm Eide Bailly LLP in Des Moines, Iowa. “They’d certainly like to be allowed by Congress to step in and allow their deductions, but they’re not counting on it.”