REP. ANGIE CRAIG INTRODUCES LEGISLATION TO ENSURE SMALL BUSINESSES WITH PPP LOANS REMAIN ELIGIBLE TO RECEIVE TAX DEDUCTIONS
Today, Reps. Angie Craig (MN-02), Lizzie Fletcher (TX-07) and Andy Kim (NJ-03) introduced the Protecting the Paycheck Protection Program Act of 2020. This legislation will ensure that small business owners with Paycheck Protection Program (PPP) loans that are forgiven are also eligible to receive tax deductions for wages and other expenses paid during the period of the loan.
“COVID-19 is threatening the American dream on main streets across the Second District. Minnesota businesses need real relief now more than ever and it’s our responsibility to make sure that we are doing that through the Paycheck Protection Program and all other means necessary to help them survive the tremendous impacts they are facing,” said Congresswoman Angie Craig. “This solution makes sure that PPP remains the life preserver it was intended to be by making sure our businesses are still able to make the purchases they need to without tax penalty.”
“Keeping businesses operating and employees paid through PPP is central to our efforts to mitigate the devastating impacts of the COVID-19 pandemic. Last week, however, the IRS issued guidance that works against this purpose and puts additional burdens on businesses in my district and across the country that are relying on these programs to survive. This guidance goes against the intent of the CARES Act and creates additional costs for small businesses that this program was designed to alleviate,” said Congresswoman Lizzie Fletcher. “I am glad to introduce legislation with my colleagues Andy Kim and Angie Craig that will clarify Congress’ intent and provide small businesses relief they need.”
“We've repeatedly seen programs meant to help small businesses poisoned by unclear and unnecessary bureaucratic rule-making. I'm proud to work with my colleagues on the Small Business Committee to help right this wrong and get our job creators the money they need to stay afloat in these tough times,” said Congressman Andy Kim.
The Internal Revenue Service (IRS) issued guidance last week that would prevent business owners who have their PPP loans forgiven from claiming tax deductions on otherwise deductible expenses if they were paid through government aid. The Protecting the Paycheck Protection Program Act of 2020 would supersede this guidance and clarify that expenses paid with forgiven PPP loans remain tax-deductible, providing small businesses with additional relief as they face the economic impacts of COVID-19.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act created the Paycheck Protection Program (PPP) to provide forgivable loans to small businesses, nonprofits, and self-employed workers to maintain existing workforce and help pay for other expenses like rent, mortgage, and utilities. As of May 1, 2020, a total of $175 billion has already been disbursed through this program.