A tax surprise could be in store for business owners that receive money through the government's forgivable loan program. That is, unless Congress takes action.
Some Americans accuse the IRS of pulling the rug out from under small-business owners. On April 30th, the IRS issued a new guidance to owners who take a loan through the Paycheck Protection Program (PPP). In it, they stated those business owners will not be able to write off expenses that would otherwise be deductible, like for salaries and wage. Financial expert JP Maroney, Founder and CEO of Harbor City Capital, says it's the wrong move.
“Small business owners who desperately have needed cash in this time of COVID-19 are now, potentially, going to be exposed more from a tax perspective and could end up being very detrimental for having taken this money,” Maroney said.
The IRS and Treasury Secretary Steven Mnuchin says they're trying to avoid double dipping by making the loan itself exempt, but not permitting a write-off of salaries and other expenses. Republican Senator Chuck Grassley disagrees. He and other lawmakers have proposed a bill that would ensure the exemption.