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.
Prior to co-founding UnifiHealth, Brodie worked at Actify Neurotherapies and PIMCO Investments. While at Actify, Brodie worked on clinic operations and strategy, reporting to the COO. His responsibilities at PIMCO included business development and client analytics for financial and benefit advisors. He also worked to implement a risk management platform for independent advisors to leverage across their book of business. Brodie is a CFA charterholder and holds an MBA from Dartmouth.
Scott Hanson is a senior partner and founding principal of Allworth Financial. A nationally recognized financial expert, he has been listed as one of the 25 most influential people in the financial services industry nationwide.
Under Scott’s direction, through a combination of both organic expansion and acquisition, Allworth Financial has grown to over $8 billion in assets under administration. Over the past two years, Scott and his business partner have introduced Allworth into over 17 markets, growing the company’s service offerings to now include tax planning, accounting, and estate planning guidance.
With over 30 years of financial sector experience, Certified Financial Planner™ Mark Shone is an advisor in Allworth Financial’s Walnut Creek office.
Mark has a degree in Finance from California State University, Sacramento, and has completed the certificate in taxation from UCLA and financial education courses at the Wharton School.
A sought-after speaker at financial education conferences, in his free time, Mark enjoys golf and plays the drums in a Bay Area band. As for his advisory philosophy, he said: “Helping people reach their financial goals is something I take very seriously, and I make it my mission to provide clients with the same level of advice and care that I would give to a member of my own family.”
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.”