The National Conference of CPA Practitioners is urging Congress to automatically forgive smaller loans under the Paycheck Protection Program, and to make sure that business expenses paid for with forgiven PPP funds are deductible.
In a letter to Sens. Chuck Grassley, R-Iowa, and Ron Wyden, D-Ore., and Reps. Kevin Brady, R-Texas, and Richard Neal, D-Mass., the group suggested that all PPP loans under $150,000 should be automatically forgiven.
The letter, co-written by NCCPAP’s president, Neil Fishman, and the co-chairs of its Tax Policy Committee, Stephen Mankowski and Sanford Zinman, noted that businesses with loans of that size were small, had often been those hit hardest by the pandemic, and might not be able to afford professional help to complete complicated forgiveness applications.
“We have spoken with many of these business owners and they are intimidated by merely glancing at the current forgiveness application,” they wrote. “This would leave them open to a miscalculation of the amount of forgiveness for which they would be entitled.”
“In addition, as CPA professionals, we speak with bank management on a regular basis,” they continued. “They have intimated that they simply do not have the capability to properly review the barrage of forgiveness applications that they will receive. If all amounts under $150,000 were to be automatically forgiven, they would have a better opportunity to properly scrutinize and review the larger PPP program loans that were issued.”
NCCPAP also expressed its support for S.3612, the Small Business Protection Act of 2020, a bill introduced by Sen. John Cornyn, R-Texas, which would clarify that business expenses paid for with PPP funds that are forgiven are deductible.
The IRS has interpreted a section of the CARES Act that created the PPP which says that any loans received under the program and forgiven “shall be excluded from gross income” to mean that business expenses paid for with those funds should be excluded from business deductions for income tax purposes.
“This ruling is in direct contrast to the intent of Congress,” NCCPAP wrote, and urged Congress to pass S. 3612, or incorporate a similar provision into future legislation.
