The Internal Revenue Service will allow businesses that got their Paycheck Protection Program loans forgiven to write off expenses paid for with that money, shifting policy after Congress passed new legislation last month.
IRS guidance issued on Wednesday overrides previous rules that recipients of PPP loans that had been forgiven couldn’t claim deductions for the wages, rent, utilities and other expenses covered by the loans. The change came after a bipartisan move in Congress to clarify that business owners should be eligible for those tax breaks.
Venkat is a senior manager in the Tax Technology and Transformation practice of Ernst & Young LLP (EY US), where she helps to define the digital strategy for the US firm's indirect tax platform and wider innovation agenda. Drawing on deep experience in AI, data engineering and cloud architecture, she leads cross-functional teams that translate complex tax requirements into agile, client-ready solutions, keeping EY US at the vanguard of tax modernization. Venkat works with tax executives to build enterprise-scale data lakes and embed agentic automation for real-time insight, reinforcing trusted delivery to businesses worldwide. She holds an MS in Information Management from Syracuse University and a B.Tech in Information Technology from Anna University.
Brent McIntosh is Citi's chief legal officer and corporate secretary. Brent leads Citi's Global Legal Affairs & Compliance organization, which includes the Legal Department, Independent Compliance Risk Management, Citi Security and Investigative Services and Citi's Regulatory Strategy and Policy function. He is a member of Citi's Executive Management Team.
Brent served as under secretary of the Treasury for international affairs from 2019 to 2021. From 2017 to 2019, Brent served as Treasury's general counsel. Prior to that, he was a partner in the law firm of Sullivan & Cromwell.
Brent served in the White House from 2006 until 2009, first as associate counsel to the president and then as deputy assistant to the president and deputy staff secretary. Before that, he was a deputy assistant attorney general at the Justice Department.
Susana Ortega Valle is the VP of Product, where she leads the strategic vision for how small business owners engage with insurance. Throughout her two-decade career, she has built a reputation for developing high-performance teams that thrive on innovation and challenge conventional thinking.
Prior to joining Simply Business, Susana held digital product leadership roles at State Street and Santander Bank. Her approach to data-informed, AI-forward product strategy is backed by a robust academic foundation, including two MS degrees in Telecommunications Engineering and an MBA from MIT.
The recent stimulus legislation updated the CARES Act passed in March to “say that no deduction is denied, no tax attribute is reduced, and no basis increase is denied by reason of the exclusion from gross income of the forgiveness of an eligible recipient’s covered loan,” the IRS said in a statement.
The change is widely regarded as a victory for small businesses, which can use tax-free money to generate more breaks, something that’s typically prohibited under the Tax Code. Lawmakers said allowing the deductions was necessary to keep small businesses afloat amid waves of restrictions and weakened consumer spending resulting from the coronavirus pandemic.
Some firms could pay a negative tax rate on their PPP money — meaning the tax benefits outweigh the amount of their loan. For business owners paying the top tax rate, it generally means they could save as much as $37 on their taxes for every $100 of tax-free PPP money they received.
The new guidance from the IRS stretches the money received from the government even further, said Lisa Zarlenga, a partner at law firm Steptoe & Johnson.
“The PPP loan proceeds are free, if they’re forgiven, effectively — so it’s a good benefit,” Zarlenga said.
Many small businesses expected to be able to claim the deductions based on the original CARES Act language, said Andrew Gibson, a managing partner at accounting firm BDO. Lawmakers made it clear that their intent was for companies to claim the deductions after the IRS said that they wouldn’t allow the tax breaks, he said. But IRS officials said they couldn’t update their guidance based on intent — they needed a law change, so the issue sat unresolved for months until it was included in the December stimulus legislation.
The delay in resolving the deductibility issue has created some problems for small businesses, said Michael Greenwald, a business tax leader at accounting firm Friedman. Other tax breaks — such as the 20 percent pass-through deduction, the R&D credit and the New Markets tax credit — interact with the expense write-offs, meaning that businesses are rushing to determine whether they can still qualify for other tax benefits they usually claim.
“Clients were clearly relieved when Congress passed this, but the other side of that coin is that they were unaware of the nuances,” Greenwald said. “When we tell them about those, it’s as if we are taking away their Christmas present.”
The $2.3 trillion bill providing COVID-19 relief and government funding for the fiscal year into 2021 includes $284 billion in additional funding for PPP loans, which were designed to limit a wave of small-business failures that could cripple the economy. The plan lets some businesses apply for a second round of funding if they can show losses during the pandemic. Deductions are allowed on second-round loans as well.