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.
Phil McGriskin is CEO and co-founder of Vitesse, the trusted financial infrastructure connecting the global insurance ecosystem. With more than 20 years of fintech and payments experience, he leads the company's global strategy, focusing on fund transparency and control, efficient claims operations and business growth.
McGriskin co‑founded Envoy Services in 2006 and led it through acquisition by Worldpay in 2011, later serving as Worldpay's chief product officer and head of Worldpay Futures. In 2014, he launched Vitesse, alongside Paul Townsend, to address inefficiencies in insurance payouts and liquidity management.
Under his leadership, Vitesse has processed billions in claims, including £4 billion in the past year—and secured major backing, most recently a $93 million Series C led by KKR to fuel U.S. expansion.
LinkedIn: https://www.linkedin.com/in/phillip-mcgriskin-521a2b1/
Steve Abbott is head of public policy and government affairs at Gusto.
Agim Emruli has over 20 years of experience in software development, architecture, and leadership, working with different technology-oriented companies in various industries, such as finance, banking, insurance, government, healthcare, and retail. He is passionate about creating and delivering innovative and scalable solutions that address complex business challenges and enhance customer experience. As the CEO of Flowable, he leads the development and growth of the open-source Intelligent Business Automation platform that combines case, process, and decision support into a single solution. He also oversees the strategic direction and operations of Mimacom, a global software development and consulting company with a focus on agile methodologies and web services.
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.”