On April 30, the Internal Revenue Service issued Notice 2020-32 which clarified that “no deduction is allowed under the Internal Revenue Code for an expense that is otherwise deductible if the payment of the expense results in forgiveness of a covered loan pursuant to section 1106(b) of the CARES Act. It is ABC’s view that this ruling is at odds with the legislative text of the CARES Act, which included Section 1106(i), which says that, with regard to the “taxability” of the loan forgiveness available to PPP recipients, any amounts forgiven by a PPP loan “shall be excluded from gross income.”
The IRS’s stance would eliminate some of the critical economic benefits of the PPP program, and both Senate Finance Chairman Chuck Grassley (R-Iowa) and House Ways and Means Chairman Richard Neal (D-Mass.) objected that the IRS wasn’t following congressional intent — with Neal going so far as to say he’d seek a legislative fix.
On May 7, ABC and other associations sent a letter to Grassley and Neal regarding this ruling. ABC will provide the latest updates on this issue in Newsline.