ICBA pushes PPP expense deductibility

ICBA and more than 500 other groups called on Congress to pass a technical correction amending the CARES Act to explicitly provide that PPP loan-forgiveness funds that cover business expenses are tax deductible.

In a joint letter, the groups said that while the CARES Act states that any portion of a PPP loan that qualified for loan forgiveness “shall be excluded from gross income” for tax purposes, the IRS determined that no deduction is allowed.

The IRS ruling transforms tax-free loan forgiveness into taxable income, raising the specter of a surprise tax increase of up to 37 percent on small businesses, the groups said.

ICBA has repeatedly urged Congress to pass the Small Business Expense Protection Act (S. 3612/H.R. 6821) to make the correction.