The American Institute of CPAs (AICPA) has expressed its support for S. 3612 – the Small Business Expense Protection Act of 2020 – in a letter thanking Senators John Cornyn (R-TX), Ron Wyden (D-OR), Marco Rubio (R-FL), Tom Carper (D-DE) and Chuck Grassley (R-IA).
On April 30th, the Internal Revenue Service (IRS) released Notice 2020-32, which indicates that no tax deduction is allowed for an expense that is otherwise deductible if the payment of the expense results in forgiveness of a Paycheck Protection Program (PPP) covered loan. The Small Business Expense Protection Act of 2020 clarifies that the receipt and forgiveness of coronavirus assistance through the PPP does not affect the deductibility of ordinary business expenses.
“It is clear that Congress intended to allow a full deduction for PPP related expenses…This important legislation helps ensure that small business taxpayers affected by the ongoing pandemic will receive the full intended benefits of the CARES Act,” the letter states.
AICPA Vice President of Taxation, Edward Karl, CPA, expanded on this support saying, “We’re grateful to Senators Cornyn, Wyden, Grassley, Carper and Rubio for their leadership on this issue and their support for small business across the country.”
Karl continued, “Small businesses are the backbone of the American economy and right now they are struggling. This bill honors the intent of the CARES Act and the PPP.”
The AICPA has been actively supporting small businesses during the pandemic, from leading the small business funding coalition that is working to protect and stabilize the national economy to providing tools and recommendations for CPA firms who are helping their clients prepare documents for PPP applications and loan forgiveness. Recently, AICPA strongly urged Treasury and the Small Business Administration (SBA) to develop a consistent and efficient approach to loan forgiveness that aligns with borrower operations and the intent of the PPP. (Read more about AICPA COVID-19 tax policy and advocacy activities.)