The IRS issued a notice stating that no tax deduction will be allowed for any expenses later forgiven under the PPP loan, so, in essence, any amount forgiven will be taxable. This notice goes against the very intent of the CARES Act, which specifically stated that loan forgiveness would not be includible in gross income. The IRS found a way around this favorable treatment by then disallowing the related deductions. The AICPA is working diligently to challenge this IRS notice, and there is a bill currently in the Senate that would overturn it as well. Until this bill actually passes, though, we will need to operate under the new guidance and hope the bill makes its way through Congress.

In other PPP news: Now that SBA has been issuing more EIDL advances, we also wanted to make sure everyone was aware that any advance will reduce the amount of your PPP loan forgiveness. For example, if you received a $5,000 EIDL advance, your ultimate PPP loan forgiveness will be reduced by $5,000 because they are essentially treating the $5,000 as an advance on PPP funds, too.

Continue checking our page regularly or consider following us on Facebook as news is changing quickly. The IRS notice referenced above was only out for a few days before the Senate had a bill in place to overturn it. To keep you well informed on the ever-changing relief options, we will continue sharing news through our website and as always feel free to reach out to us with any questions you might have.