NAMM Joins Coalition of U.S. Associations Calling on Congress to Overturn the IRS Decision on PPP Loan Expense Deductibility

This week, NAMM joined almost 700 hundred state and national associations as signatory to a 12/3 letter calling for Congress to overturn its earlier ruling, regarding PPP loan expense deductibility.

As posted on 11/23 below, in November, the U.S. Treasury Department and Internal Revenue Service (IRS) reiterated guidance issued late summer (Notice 2020-32) clarifying the tax treatment of expenses where a Paycheck Protection Program (PPP) loan has not been forgiven by the end of the year the loan was received. The guidance states that since businesses are not taxed on the proceeds of a forgiven PPP loan, the expenses are not deductible, resulting in neither a tax benefit nor tax harm since the taxpayer has not paid anything out of pocket. The coalition’s recent letter calls on Congress to include a fix to clarify that recipients of forgivable PPP loans can claim normal business expense deductions in any end-of-year legislation.

A summary of the bipartisan COVID relief package was released earlier this week which said that “business expenses paid for with the proceeds of PPP loans are tax deductible, consistent with Congressional intent in the CARES Act” however, we understand that Secretary Mnuchin’s offer to Democratic leadership did not include this provision. Negotiations continue.