Coronavirus-Related Distribution and Loans Guidance Released
IRS Mail Backlog and Penalty Abatement Requests

PPP Loan Forgiveness: Status of Notice 2020-32

By Donna Wesling, CPA-Austin

 

The question of whether expenses paid with Paycheck Protection Program (PPP) loan proceeds can be tax deductible remains unsettled at this time. It seems clear that the intent of Congress was for these loans, if forgiven, to have no tax consequence. The language of the Coronavirus Aid, Relief and Economic Security (CARES) Act of 2020 specifically says that the loan forgiveness will not be income from cancellation of debt. However, in Notice 2020-32, the IRS has taken the position that expenses paid with the PPP loan proceeds are not deductible and Treasury Secretary Mnuchin is standing by that notice.

 

Senator John Cornyn (R-TX) introduced S. 3612 in the Senate to specifically make the PPP expenses deductible, but the bill has not been enacted. At TXCPA’s Annual Meeting of Members, Senator Cornyn indicated that he is hopeful this will be wrapped into additional coronavirus relief legislation in July.

 

Senator Cornyn also indicated that he is hopeful that the legislation would include a simplified forgiveness application for smaller loans (under $250,000). The U.S. Small Business Administration (SBA) has issued a form for the forgiveness application with a revision date of June 16, 2020.

 

The PPP loan guidance has been changing at a rapid pace so stay tuned for further developments.

 

https://www.irs.gov/pub/irs-drop/n-20-32.pdf

https://www.congress.gov/bill/116th-congress/senate-bill/3612

https://www.sba.gov/sites/default/files/2020-06/PPP%20Loan%20Forgiveness%20Application%20%28Revised%206.16.2020%29.pdf

Comments

Verify your Comment

Previewing your Comment

This is only a preview. Your comment has not yet been posted.

Working...
Your comment could not be posted. Error type:
Your comment has been saved. Comments are moderated and will not appear until approved by the author. Post another comment

The letters and numbers you entered did not match the image. Please try again.

As a final step before posting your comment, enter the letters and numbers you see in the image below. This prevents automated programs from posting comments.

Having trouble reading this image? View an alternate.

Working...

Post a comment

Comments are moderated, and will not appear until the author has approved them.

Your Information

(Name is required. Email address will not be displayed with the comment.)