COVID-19 relief bill clarifies PPP loans
By: Janice Francis-Smith, Bridgetower Media
December 29, 2020
10:30 am
Congress clarified some of the confusion regarding Paycheck Protection Plan loans with the $900 billion COVID-19 economic relief package agreed to on Sunday.
The new legislation contradicts the IRS’ earlier interpretation that businesses would not be allowed to deduct for expenses paid with forgiven PPP dollars. The measure also provides millions more in relief funding for small businesses, including performance venues.
The PPP loans were originally understood to be eligible for tax-free forgiveness if at least 60% of the money was spent on payroll. But a few months into the process, the IRS announced that expenses paid with the other 40% of the loan could not be deducted on 2020 tax returns, asserting that recipients would be receiving a double benefit by deducting expenses paid for by the government.