Business Owners – this is for you!
The IRS issued Notice 2020-32 indicating that expenses funded with forgiven PPP loan proceeds are not tax-deductible. We believe this is contrary to the intent of the CARES Act. If you agree, we encourage you to contact your elected officials.
Contact Information for Oklahoma Senators
Senator James Lankford
Senator James Inhofe
Find your U.S. House Representative here
Representative Kevin Hern (1st District)
Representative Markwayne Mullin (2nd District)
Representative Frank Lucas (3rd District)
Representative Tom Cole (4th District)
Representative Kendra Horn (5th District)
Here is some language to assist you in conveying this message:
IRS Notice 2020-32 is contrary to the stated intent of the CARES Act. Congress clearly intended that the taxpayer not be taxed on the forgiveness of debt income that would otherwise normally arise if and when some or all of the taxpayer’s PPP loan was forgiven under the terms of the CARES Act. Specifically, the CARES Act Section 1106: Loan Forgiveness provides provisions covering when and how the PPP loans will be forgiven and then states:
(i) TAXABILITY.—For purposes of the Internal Revenue Code of 1986, any amount which (but for this subsection) would be includible in gross income of the eligible recipient by reason of forgiveness described in subsection (b) shall be excluded from gross income.
If Congress intended the result the IRS Notice creates, then they could have just excluded the above Section 116(i) from the bill shown above. Small business owners participated in good faith in the PPP based on the clear statutory language of the Act.
We look forward to clarification.
The Mettise Group will continue to post updates to bring you the most current information. Find our COVID-19 resource page here.