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.
Carter Pape has covered cybersecurity, financial crime and emerging technology for American Banker since January 2022.
Pape, reporting from Sacramento, California, connects technical complexities to their practical consequences. He examines how cybercriminals target and infiltrate banks and how the technologies reshaping the world (such as AI and quantum computing) create new risks for banks and their customers.
Pape's work has earned recognition at the regional and national levels, having earned him an award and award finalist recognitions from the American Society of Business Publication Editors and SIIA.
Highlights of Pape's work include:
- No longer optional: Cyber risk oversight for boards, which examined the expanding liability exposure facing bank directors as regulators raise expectations for cyber governance;
- Inside a sophisticated, foiled cyber-heist targeting ATMs, an account of a coordinated attack on bank cash infrastructure and the defenses that stopped it;
- The promise and perils of QR codes in banking, which explored how a ubiquitous consumer technology became a vector for financial fraud.
- How quantum computers work, and how banks can use them, which broke down the physics and engineering of quantum computation and assessed the realistic near- and long-term implications for the banking industry
- Main Street banks can avoid Wall Street's WhatsApp fines. Here's how. This article explained how community banks could navigate SEC enforcement around personal device usage for work communications.
Pape's broader coverage at American Banker addresses data breaches, fraud prevention, regulatory compliance, artificial intelligence in financial services and the evolution of digital banking.
Before joining American Banker in January 2022, Pape spent three years as a reporter at The Times-Independent in Moab, Utah, where he was one of four full-time journalists covering a county of 10,000 people.
Pape reported on public lands, local government, housing and more. He also rebuilt the publication's website from the ground up, earning the Utah Press Association's Best Website award in 2019 for the redesign.
Pape's reporting on Moab won recognition from the Utah Press Association for excellence in government and politics reporting (first place) as well as general news (second place) and education coverage (second place).
Pape holds a degree in mathematics from North Carolina State University. At NC State he became news editor of the student newspaper, Technician, to get a break from the analytical and technical work of mathematical proofs. The experience inspired him to pursue a career in journalism.
Alongside his seven years as a journalist, Pape brings more than a decade of programming experience, having interned as a software developer for companies including IBM. He continues to regularly tinker with Python, Docker and shell scripting in his free time.
Daniel Wolfe is editor-in-chief of Digital Insurance.
Most recently, he was director of data services at Arizent, which publishes DI and American Banker. In this role he managed the company's editorial use of automation and AI, with the mission of expanding quality data journalism and products across all brands.
Previously Daniel headed American Banker's payments and credit union coverage, and before that he was editor-in-chief of PaymentsSource, a sister publication that combined with American Banker in 2021. Prior to that, Daniel held roles at American Banker including tech and risk management editor; technology, cards and payments editor; and technology reporter. Throughout his career, Daniel has taken a central role in hosting leading industry conferences including Payments Forum, Card Forum and PayThink. He has appeared on Yahoo! Finance and received the American Society of Business Publication Editors' national silver award for sustainability reporting in 2024 for his coverage of the credit card industry's environmental impact.
He has a master's degree in print journalism from Boston University's College of Communication and a bachelor's degree in English from SUNY Binghamton.
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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.”