Senate Finance Committee Chairman Chuck Grassley (R-Iowa) and ranking member Ron Wyden (D-Ore.) yesterday criticized new Treasury Department guidance about the tax treatment of expenses related to Paycheck Protection Program (PPP) loans, asking the department to revisit its approach, The Hill reported. "We encourage Treasury to reconsider its position on the deductibility of these expenses, and the timing of those deductions, to provide relief to the small businesses that need it most,” Grassley and Wyden said in a statement. The PPP is a coronavirus relief program under which small businesses received loans that can be forgiven if the proceeds are used to maintain payroll. The legislation that created the PPP includes a provision stating that the loan forgiveness is not considered taxable income. Under guidance Treasury and the IRS issued on Wednesday, if a business hasn't had its PPP loan forgiven at the end of the year but expects the loan to be forgiven in the future, the company cannot deduct expenses related to the loan, even if the business hasn't yet filed for forgiveness. The guidance follows a notice Treasury and the IRS issued in the spring stating that expenses associated with loan forgiveness under the PPP are not deductible.
