To My Friends at NCCPAP:
By Mark A. Stewart, Jr., CPA, National President, NCCPAP
December 4, 2020—This year has brought enough hardships for a lifetime. Our profession has been one of the lucky few ones that has actually thrived during the pandemic; however, we must remember that many other businesses are still struggling just to survive. Right now, it is more important than ever that we advocate for these businesses. We need our members to show their power and strength in numbers by bringing to the attention of our local elected officials that the small business community needs their help to right a wrong.
Many small businesses may be hit with a ‘surprise tax’ related to the Paycheck Protection Program (PPP) loans—unless Congress acts soon. In the Coronavirus Aid, Relief, and Economic Security (CARES) Act, Congress clearly intended for recipients of forgiven PPP loans to be able to deduct otherwise-deductible expenses associated with those loans for tax purposes, but the IRS has contradicted that congressional intent. It has declared that borrowers who expect their PPP loan to be forgiven cannot deduct those expenses on their federal tax returns. Not being able to deduct those expenses will result in a significant tax burden.
Tell your members of Congress to support small businesses, such as your own, by quickly passing S.3612 and H.R.6821, the Small Business Expense Protection Acts of 2020, or H.R.6754, the Protecting the Paycheck Protection Program Act. This legislation will ensure that the receipt and forgiveness of coronavirus assistance through the PPP does not result in an unexpected and burdensome tax cost for organizations that complied with the terms of the PPP. Passing this legislation as soon as possible will allow small businesses more certainty as they focus on year-end business planning that is especially important in these challenging economic times.
This is a joint effort of all CPA organizations. The AICPA has shared with us the below template which you can use to write your local Congressperson.
I am writing you today to strongly encourage you to include in any year-end, must-pass legislation language that will allow millions of small business owners a tax deduction for expenses paid with Paycheck Protection Program (PPP) forgiven loans.
Bills have been introduced in the Senate (S.3612 sponsored by Senator Cornyn (R-TX)) and in the House (H.R. 6821 sponsored by Representative Holding (R-NC) or H.R. 6754 sponsored by Representative Fletcher (D-TX)) that would ensure that PPP loan recipients are provided the full benefits intended in the CARES Act.
All Americans have been impacted by the COVID-19 pandemic, and your actions in Congress have provided much-needed assistance to millions of struggling businesses.
It is important that you ensure that these same businesses are not also subject to additional and unexpected taxes as they continue to struggle to survive.
Borrowers who are eligible for forgiveness of their PPP loans have spent the funds as the program directed. Unless they are allowed to deduct these expenses, they may be forced to spend additional funds to pay taxes on the loan proceeds – funds they may not have. Passing this legislation as quickly as possible will provide small business owners more certainty as they focus on year-end business planning that is especially important in these challenging economic times.
I ask that you contact your Senate and House leaders to ensure that PPP loan forgiveness deductibility language is passed by Congress before the end of the year.
I also want to take a moment to sincerely thank the entire ATS 2020 (Accounting and Tax Symposium 2020) conference committee for an absolutely Herculean effort to successfully conduct this four-day virtual event. I saw firsthand, in the months leading up to the event, the countless volunteer hours spent on planning and executing those plans. The collaboration again shows the best of what NCCPAP can be. While this event is a highlight of our organization each year, it creates momentum that we should continue to build upon throughout the year. Please look for new announcements of more shared events among our various chapters featuring exciting speakers and topics.
Wishing you and yours a safe, happy, and healthy holiday season!
Mark A. Stewart, Jr., CPA
The National Conference of CPA Practitioners (NCCPAP) is a professional organization comprised of Certified Public Accountants practicing in the United States. In addition to serving as a forum for education, networking, and community impact, NCCPAP also advocates for its clients. NCCPAP influences tax administration and tax policy by regularly meeting with Internal Revenue Service representatives, state taxing authorities, and elected officials. NCCPAP members represent over one million businesses and individual clients. The organization is headquartered in Woodbury, NY. For more information visit, www.NCCPAP.org.